Other results from RealtyTrac show that:

• There were 1,961,894 foreclosure filings — default notices, auction sale notices and bank repossessions — for 1,654,634 U.S. properties during the first six months of 2010.
• There was a 5 percent decrease in total properties facing foreclosure when compared with the last half of 2009.
• Compared with the first six months of 2009, the number of properties facing foreclosure increased by 8 percent.
• Foreclosure filings were reported on 313,841 U.S. properties in June, a decrease of nearly 3 percent from the previous month and a decrease of nearly 7 percent from June 2009.

“The second quarter was a tale of two trends,” said James J. Saccacio, chief executive officer of RealtyTrac. “The pace of properties entering foreclosure slowed as lenders pre-empted or delayed foreclosure proceedings on delinquent properties with more aggressive short sale and loan modification initiatives. Meanwhile the pace of properties completing the foreclosure process through bank repossession quickened as lenders cleared out a backlog of distressed inventory delayed by foreclosure prevention efforts in 2009.

“The midyear numbers put us on pace to exceed 3 million properties with foreclosure filings by the end of the year, and more than 1 million bank repossessions,” Saccacio continued. “The roller coaster pattern of foreclosure activity over the past 12 months demonstrates that while the foreclosure problem is being managed on the surface, a massive number of distressed properties and underwater loans continues to sit just below the surface, threatening the fragile stability of the housing market.”

State Foreclosure Rates

“Nearly 6 percent of all Nevada housing units (one in 17) received at least one foreclosure filing in the first half of 2010, giving Nevada the nation’s highest foreclosure rate during the six-month period despite decreasing foreclosure activity,” says RealtyTrac. “A total of 64,429 Nevada properties received a foreclosure filing from January to June, a decrease of 13 percent from the previous six months and a decrease of 6 percent from the first six months of 2009.

Other states with steep foreclosure percentages include California, Arizona, Florida, Utah, Georgia, Michigan, Idaho, Illinois, and Colorado.

State Foreclosure Numbers

RealtyTrac says a “total of 340,740 California properties received a foreclosure filing in the first half of 2010, the nation’s highest total but down 15 percent from the previous six months and down nearly 13 percent from the first six months of 2009.”

Other states with big foreclosure numbers include Florida (277,073 properties), Arizona (91,484), Illinois (85,223), Michigan (78,509), Georgia (71,949), Texas (64,883), Nevada (64,429), Ohio (59,927), and New Jersey (36,542).

Foreclosure Trends Show Little Love In 2010 is a post from: Refinance, Home Mortgage Loans & Rates, Home Equity Loan

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The RealtyTrac numbers — which are used by HUD as part of its monthly housing scorecard — show that savvy buyers are purchasing large numbers of distressed properties.

“First time homebuyers and investors continue to buy foreclosure properties in large numbers, and at substantial discounts,” says James J. Saccacio, chief executive officer of RealtyTrac. “As lenders have begun repossessing homes at record levels over the first half of 2010, it will be interesting to watch how they will manage the inventory levels of distressed properties on the market in order to prevent more dramatic price deterioration.”

Foreclosures Up 2,500% Since 2005

Foreclosures — once a rarity in the U.S. housing market — have become more common. RealtyTrac says a majority of transactions in a number of states involve distressed properties including Nevada (64 percent), California (51 percent) and Arizona (50 percent). Other states with at least one-third of all transactions involve foreclosure sales include Massachusetts, Rhode Island, Florida, Michigan, Georgia, Illinois, Idaho and Oregon.

“More than 1.2 million U.S. properties in some stage of foreclosure sold to third parties in 2009,” says RealtyTrac, “an increase of 25 percent from 2008 and an increase of nearly 327 percent from 2007. Total foreclosure sales in 2009 were up more than 1,100 percent from 2006 and up more than 2,500 percent from 2005. Foreclosure sales accounted for 29 percent of all sales in 2009, up from 23 percent in 2008 and up from 6 percent in 2007.”

Foreclosure Discounts Getting Larger

If you buy a foreclosure the odds are good that you will pay far less than for a home which is not distressed. The typical foreclosure was priced 34 percent below the value of a comparable property where the owners had ggood financial standing. The largest disclosure was in New York state (52 percent). Other big discount states included Kentucky (45.88%), Ohio (44.56%) and Illinois (45.88%, same as Kentucky).

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Borrowers don’t have to walk away, says the company. “Troubled borrowers who work with their servicers, and provide information to help the servicer assess their situation, can be considered for foreclosure alternatives, such as a loan modification, a short sale, or a deed-in-lieu of foreclosure. A borrower with extenuating circumstances who works out one of these options with their servicer could be eligible for a new mortgage loan in three years and in as little as two years depending on the circumstances.”

The announcement is the latest in a series from various lenders and loan buyers that concern so-called strategic walk-aways, individuals who refuse to pay their mortgage even though they have the financial capacity to do so.

Problems

There are several problems with the get-tough policy:

First, and obviously, why should residential borrowers be unable to walk away from mortgage loans when walking away is a common commercial practice? Just consider that in Manhattan the Stuyvesant Town-Peter Cooper Village complex was bought for $5.6 billion in 2006. The property is now in bankruptcy, with a first-lien debt of some $3.66 billion according to Bloomberg News.

Does anyone seriously think that the 2006 buyers, Tishman Speyer Properties LP and BlackRock Inc., entities with huge assets, will no longer be able to get a mortgage? How come the same standard doesn’t apply to a borrower who qualified for FHA or VA financing in 2006 but was sold a toxic loan?

Second, in about a third of the states neither Fannie Mae nor anyone else can get a deficiency judgment when a residential mortgage fails. The Fannie Mae policy implicitly punishes borrowers in some states but not in others, a hint that other states should dump pro-bank deficiency judgment laws.

Third, Fannie Mae says “a borrower with extenuating circumstances who works out one of these options with their servicer could be eligible for a new mortgage loan in three years and in as little as two years depending on the circumstances.” And just who is going to determine which circumstances of “extenuating” and which are not? Will a borrower with an option ARM be treated the same as a borrower who cannot make payments on a conventional mortgage? That hardly seems reasonable.

Here’s the question: What will Fannie Mae do about the mortgage lemons sold to borrowers? Will such loans be recalled?

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According to the Federal Trade Commission, the government has sought to ban more than a dozen marketers from selling mortgage relief and foreclosure relief services, in one instance seeking $11.4 million for contempt.

The release from the FTC follows:

As part of the agency’s continuing crackdown on scams that prey on financially distressed homeowners, the Federal Trade Commission announced legal actions against more than a dozen marketers accused of pitching bogus mortgage modification or foreclosure relief services.

FTC settlement orders ban 16 marketers from the mortgage modification or foreclosure relief business. The promoter of a similar scam has been ordered to pay $11.4 million for flouting a previous court order. And, in a new action, the FTC has charged another online marketing operation with masquerading as a government mortgage assistance program.

The FTC settled with the following defendants, all of whom charged consumers up-front fees and made false promises that they could get their loans modified or prevent foreclosure:

Making Home Affordable. The FTC alleged that the defendants impersonated MakingHomeAffordable.gov, a federal government Web site that helps eligible homeowners refinance or modify their mortgages. Defendants Sean Cantkier, Michael Haller, Alan LeStourgeon, Greg Rivera, Lisa Roye, and Jeffrey Altmire bought advertising links on the results pages of Internet search engines, and consumers looking for “making home affordable” were diverted to commercial Web sites that pitched loan modification services or sold consumers’ personal information to marketers of such services. (7/10/2009 release http://www.ftc.gov/opa/2009/07/homeafford.shtm) The defendants will have to give up their ill-gotten gains, ranging from $1,523 to $29,179. Separately, the Commission authorized and the court approved the addition of two counts to the complaint against Scot Lady and dismissed Kean Lee Lim as a defendant. The documents were filed in the U.S. District Court for the District of Columbia.

Federal Loan Modification Law Center. Defendants Nabile (“Bill”) Anz, Federal Loan Modification Law Center LLP, Anz & Associates PLC, Venture Legal Support PLC, and Jeffrey Broughton settled FTC charges that they hawked their so-called “Federal Loan Modification program” in a national advertising campaign targeting financially distressed homeowners. They charged up to $3,000, much of which they required up-front, but Federal Loan Modification often failed to live up to the promised results, according to the FTC’s complaint. (06/26/2009 release http://www.ftc.gov/opa/2009/06/fedloanmod.shtm) In addition to the ban on selling mortgage relief services, the settlement order against Anz, Federal Loan Modification Law Center, Anz & Associates, and Venture Legal Support imposes a $10.8 million judgment, and the order against Broughton imposes a $11.1 million judgment. The judgments are suspended based on their inability to pay. The full judgments will become due immediately if they are found to have misrepresented their financial condition or receive any money from the remaining defendants. The order was filed in the U.S. District Court for the Central District of California. The FTC continues to pursue its case against five other defendants.

Apply2Save. Derek R. Oberholtzer, Apply2Save Inc., and Sleeping Giant Media Works, Inc. allegedly charged consumers up to $995 in advance for promised mortgage loan modification services. Once they were paid, they often failed to answer or return consumers’ telephone calls and sometimes falsely blamed delays on lenders, even though they had made little or no effort to contact lenders, the FTC charged. Most consumers who got loan modifications or avoided foreclosure did so only through their own efforts. (7/15/2009 release http://www.ftc.gov/opa/2009/07/loanlies.shtm) The defendants have filed for bankruptcy. The order imposes a judgment of more than $4 million, which is suspended based on their inability to pay. The full judgment will become due immediately if they are found to have misrepresented their financial condition. The order was filed in the U.S. District Court for the District of Idaho.

New Hope Modifications. Brian Mammoccio and Donna Fisher have settled charges that they falsely claimed they could obtain mortgage loan modifications for consumers in all or virtually all cases, falsely promised a money-back guarantee, and masqueraded as part of the federally-endorsed HOPE NOW Alliance mortgage assistance network. According to the FTC complaint, in many cases, after consumers paid up-front fees, the defendants failed to return their phone calls, or falsely told them that negotiations were proceeding smoothly. In many instances, consumers learned from their lenders that the defendants had not contacted them. (3/24/2009 release http://www.ftc.gov/opa/2009/03/newhope.shtm)

In addition to the ban on selling mortgage relief services, the settlement order imposes a judgment of almost $3.9 million, which will be suspended when the defendants surrender their assets as specified in the order. The full judgment will become due immediately if they are found to have misrepresented their financial condition. The order was filed in the U.S. District Court for the District of New Jersey.

The $11.4 million contempt order against Bryan D’Antonio and three companies he controls,The Rodis Law Group Inc., America’s Law Group Inc., and The Financial Group Inc., came at the request of the FTC, which charged that operators of the scam had falsely claimed they would stop foreclosures and negotiate lower mortgage interest rates, monthly payments, and principal balances. Promoters of the scam claimed a 100 percent success rate and wrongly advised consumers to pay them instead of making mortgage payments. The FTC alleged that homeowners got few, if any, loan modifications, and many people lost their homes to foreclosure after paying them up to $5,500. The operators also falsely claimed that attorneys would check consumers’ loan documents for fraud and other lending violations that they would use as leverage in negotiating loan modifications, according to the complaint.

In May 2009, the FTC charged the defendants with violating a 2001 order that banned D’Antonio from telemarketing and misleading consumers about goods or services. The FTC obtained the 2001 order against D’Antonio and his former company, Data Medical Capital Inc., for operating a work-at-home medical billing opportunity scheme. D’Antonio also pleaded guilty to mail fraud for his involvement in that scam and served almost three years in prison. In addition to the financial sanctions against D’Antonio and the three companies, the court barred him from making misleading statements about refunds, exchanges, and total costs or quantity. The FTC has collected more than $1 million from the defendants’ available assets thus far, and will refer the remainder of the $11.4 million judgment to the Department of the Treasury for collection. The FTC has set up a consumer information line at 1-888-398-8205.

Fedmortgageloans.com. The FTC has charged Dominant Leads LLC, MAD TJ Holdings LLC, James Rambadt, Thomas Hayes, and James Kane with misrepresenting that the mortgage assistance and debt relief programs they are marketing are affiliated with the federal or state government, and that consumers may be eligible for a federal or state loan modification or debt relief program. Some of the defendants’ Web sites use logos similar to the federal government’s MakingHomeAffordable.gov logo, and many of their sites feature official government agency seals or logos and links to federal government Web sites. When consumers seeking mortgage assistance or debt relief services call the toll-free numbers on the defendants’ Web sites, they are connected to other companies that sell supposed mortgage assistance relief or debt relief services for a fee. The FTC seeks to stop the defendants’ illegal practices and make them forfeit their ill-gotten gains. The complaint was filed in the U.S. District Court for the District of Columbia on June 16, 2010.

The Commission votes were unanimous in these actions.

The Federal Trade Commission is a member of the interagency Financial Fraud Enforcement Task Force. For more information on the task force, go to www.stopfraud.gov.

NOTE: The Commission authorizes the filing of a complaint when it has “reason to believe” that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendants have actually violated the law. Stipulated court orders are for settlement purposes only and do not necessarily constitute an admission by the defendants of a law violation. Stipulated orders have the full force of law when signed by the judge.

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Relief

In the usual case, disaster relief from mortgage investors falls into six possible categories:

1. Suspend mortgage payments for several months.
2. Reduce the payments for several months.
3. Waive penalties and late fees against borrowers with disaster-damaged homes.
4. Quickly releasing insurance money to help borrowers repair homes.
5. Create longer loan modification plans in severe situations.
6. Temporarily discontinue reporting delinquencies caused by the storm to credit reporting agencies.

While these are the forms of relief which Fannie Mae and Freddie Mac will be offering, relief is not automatic. You must apply to your loan servicer — the company that collects the monthly mortgage payment — for assistance. Also, generally, you must live in or near the spill zone, which generally means homeowners in Louisiana, Mississippi, Texas, Florida and Alabama.

Freddie Mac

Under the Freddie Mac forbearance program, mortgage servicers can suspend mortgage payments for up to three months or reduce payments for up to six months. Servicers may recommend to Freddie Mac forbearance for up to twelve months in situations which are especially difficult and drawn out..

In addition, Freddie Mac says servicers “must not accrue or collect late charges from the borrower during a short-term forbearance or any subsequent repayment plan period if the borrower is paying according to the forbearance agreement.”

Fannie Mae

Fannie Mae says “servicers may immediately suspend or reduce mortgage payments for borrowers whose properties or income are negatively impacted by the Gulf oil spill.” Notice the term “may” — there is no “must” in the policy.

Under its “Special Relief Measures” policy, Fannie Mae servicers “may suspend or reduce a borrower’s payments for up to 90 days while the servicer determines the nature and extent of the impact the disaster is having on the condition of the property or on the borrower’s financial condition. At the conclusion of that assessment, servicers have additional flexibilities to evaluate the appropriate loss mitigation alternative based on a case-by-case determination, including an additional three months of forbearance, a loan modification or other customized solution.”

As with Freddie Mac, relief is not automatic. You must contact your servicer if you have been impacted by the BP oil spill.

Other Lenders

Most borrowers do not know who owns their loan, in part because loans are frequently bought and sold. If your loan is not owned by Fannie Mae or Freddie, or if you do not know who owns your loan, contact your servicer anyway. Other loan owners may also have forbearance programs in place.

As an example, CitiMortgage has “announced a foreclosure suspension program for CitiMortgage-owned mortgages in coastal areas hard-hit by the oil spill in the Gulf of Mexico. The aim of this program is to allow distressed homeowners to remain in their homes during these uncertain times as the Gulf communities respond to the oil spill and its economic repercussions. During the three-month suspension, effective June 17 through September 17, 2010, borrowers with first mortgage loans owned by CitiMortgage and who meet certain other criteria will not be subject to foreclosure sales or foreclosure notifications. While CitiMortgage does not own all of the loans it services, the company hopes to help as many borrowers as possible with this initiative.”

“CitiMortgage’s Gulf region foreclosure suspension,” says the company, “affects only those loans it owns in the region. Under the program, CitiMortgage will halt all foreclosure sales on first mortgage accounts in highly impacted coastal areas through September 17th. In addition, evictions on real estate owned properties (REO) will cease during this time. CitiMortgage borrowers occupying residences in zip codes within approximately 25 miles of affected coastal areas will be eligible for the program.”

Cautions

If you are able to get mortgage payments suspended, be sure to ask your servicer how the money is to be repaid. For instance, will money be added to your monthly cost once payments resume? Will the loan term be extended? Etc.

If a foreclosure action is halted can you bring your loan current and stop the foreclosure during the suspension period?

Also, if you’re turned down by your servicer ask if their decision can be appealed. If yes, to whom?

Finally, carefully document all servicer contacts — name, date, who you spoke with, etc. Send in paperwork by certified mail with a return receipt requested to prove when things were sent — and when they were received.

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Ten states accounted for more than 70 percent of the 322,920 filings last month. California alone accounted for more than 22 percent of that total. In all, foreclosure filings nationwide fell 3 percent compared to April and were up just less than 1 percent from May 2009.

Foreclosure rates have vacillated in previous months. Amid the economic uncertainty, there’s been a lone constant — the continuing safety of VA loans.

These flexible, powerful loans have weathered the subprime collapse and its devastating wake, outperforming all other major loan types, according to the Mortgage Bankers Association. Here’s the MBA breakdown of foreclosure rates for the four major loan types as of Q4 2009:

• Subprime loan foreclosures: 15.58%
• FHA loan foreclosures: 3.57%
• Prime loan foreclosures: 3.31%
• VA loan foreclosures: 2.46%

The Department of Veterans Affairs has long utilized a strict yet realistic underwriting process that puts a premium on the health, safety and financial security of the veteran. VA loans are typically easier for veterans to obtain than conventional loans. In fact, about 80 percent of VA borrowers could not have obtained a loan with conventional financing, according to agency studies.

That isn’t to say that the wave of home foreclosures has skipped VA loans entirely. But the VA has taken steps to minimize the impact and help veterans who are facing foreclosure. Veterans whose VA loans are in jeopardy have access to supplemental servicing to help stave off default. VA borrowers can connect with a loan specialist by calling 877-827-3702.

The VA has no legal authority to intervene on behalf of veterans without an agency-approved loan. But the VA has urged veterans facing default to immediately contact their lenders to discuss potential solutions, which can include loan forbearance, loan modification and new payment regimens.

There are also cases where veterans may be able to seek protection under provisions of the Servicemembers Civil Relief Act, or SCRA. This legislation provides qualified veterans with the ability to get a lower interest rate for a period of 12 months. Recently discharged service members can also use SCRA provisions to push back evictions or foreclosures for up to nine months.

The VA has also pointed veterans to a national nonprofit group that’s working to help underwater homeowners. The group, called the HOPE NOW Alliance, offers counseling and assistance to homeowners in need. Veterans can contact the agency by calling 1-888-995-4673 or by visiting www.hopenow.com.

____________________________________

About the author: Chris Birk writes about real estate and the mortgage industry for a host of sites and publications, including Bigger Pockets, Mortgages Unzipped and Scotsman Guide. A former newspaper and magazine writer, he is also content director for a leading VA lender.

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If you want a mortgage, Esteemed has one for you. Recent bankruptcy? No problem? A foreclosure last month? So what. Less income? They can work with you.

And help with short sales? Who could possibly do a better job than Esteemed?

“We guarantee a loan to fit every situation,” says Esteemed. “Our qualified loan specialists have been helping people just like you find the best interest rates and loan terms possible for your unique situation. We will guide you every step of the way to get you the loan you need. You can lower your current payments on your mortgage, refinance existing debt, and even get extra cash to pay for unexpected expenses.”

And getting a loan is hardly more difficult than going through a car wash.

“Even if you’ve been turned down by other lenders because of a less than perfect credit history, we can help. It’s time to act and start saving money today. Apply now and let us help you start on your way towards a debt-free future!

“It’s easy to qualify and 100% FREE to apply.”

There are two things about this lender which stand out. First, its “line” sounds a lot like some other lenders we’ve heard. Second, the company is a fraud.

“These scammers may create professional-looking websites, use trustworthy-sounding names and promise you loans to help meet your needs or live your dreams, even if you’ve had credit problems,” says the FTC.

“The catch comes when you apply for a loan or credit card and find out there’s a fee you have to pay first. If you pay, it’s unlikely you’ll see the promised loan, and you run the risk of someone using your personal or financial information to steal your identity.”

Six Warnings

The FTC says borrowers should be aware of six rad flags when looking at online mortgage sites:

• A lender who isn’t interested in your credit history. Ads that make claims like Bad credit? No problem, We don’t care about your past. You deserve a loan, Get money fast, or even No hassle — guaranteed often indicate a scam.
• Fees that are not disclosed clearly or prominently. Legitimate lenders disclose their fees clearly and prominently; they take their fees from the amount you borrow; and the fees usually are paid to the lender or broker after the loan is approved.
• A loan that is offered by phone. It is illegal for companies doing business in the U.S. by phone to promise you a loan and ask you to pay for it before the loan comes through.
• A lender who uses a copy-cat or ‘wanna-be name.’ Crooks give their companies names that sound like well-known or respected organizations and create websites that look slick to try to convince you they’re legitimate.
• A lender who is not registered in your state. Lenders and loan brokers are required to register in the states where they do business. Checking registration does not guarantee that you will be happy with a lender, but it helps weed out the crooks.
• A lender who asks you to wire money or pay a particular person. Legitimate lenders don’t ask anyone to do that.

More Bogus Sites

The FTC has created a number of fake sites in addition to Esteemed Lending Services. For instance, there’s FatFoe which will help you lose weight without diet or exercise and, of course, there’s also Glucobate™, the all-natural diabetes breakthrough. Glucobate uses “Cucumis melo — or Elixir of Muskmelon — an all-natural sugar regulator with none of the side effects of the medications that break your budget without curing your condition.”

The FTC is using bogus sites to make a point: The fact that something is on the Internet and has a really nice web page does not mean a product or service is anything but an outright fraud. Use common sense, check around, speak with licensed professionals and hold on to both your wallet and your wonder when you see claims which seem to good to be true.

This Mortgage Lender Is A Fake (Don’t Just Take Our Word For It) is a post from: Refinance, Home Mortgage Loans & Rates, Home Equity Loan

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“The numbers in May continued and confirmed the trends we noticed in April: overall foreclosure activity leveling off while lenders work through the backlog of distressed properties that have built up over the past 20 months,” said James J. Saccacio, chief executive officer of RealtyTrac. “Defaults and scheduled auctions combined increased by 28 percent from 2007 to 2008 and another 32 percent from 2008 to 2009 — creating a build-up of delayed bank repossessions. Lenders appear to be ramping up the pace of completing those forestalled foreclosures even while the inflow of delinquencies into the foreclosure process has slowed.”

RealtyTrac found that 96,462 properties received default notices (NOD, LIS) in May, a 22 percent decrease from May 2009. It was the fewest default notices since November 2008 and down 32 percent from the peak of 142,064 default notices in April 2009, according to the company.

First-time foreclosure auctions were held for 132,681 U.S. properties, a number down less than 1 percent from May 2009. The May 2010 total, says RealtyTrac, was down 16 percent from the peak of 158,105 scheduled auctions in March 2010.

However, “bank repossessions (REOs) hit a record monthly high for the second month in a row in May, with a total of 93,777 U.S. properties repossessed by lenders during the month — an increase of 1 percent from the previous month and an increase of 44 percent from May 2009. All 50 states posted year-over-year increases in REO activity.”

Translation: Lenders are getting rid of their foreclosed properties, reducing inventories. At the same time, they have slowed foreclosure actions — another move that holds down inventories.

The Top 10 Foreclosure States

California, Florida, Michigan, Illinois, Nevada, Georgia, Texas, Ohio, and New Jersey represented more than 70 percent of all foreclosure activity by unit volume.

Metro Areas

Metro areas may be doing better than expected.

“With a 1 percent increase in foreclosure activity from May 2009, Vallejo-Fairfield, Calif., was the only metro area with a top-10 foreclosure rate to post an annual increase in foreclosure activity,” says RealtyTrac.

“All other metro foreclosure rates in the top 10 were in cities with declining foreclosure activity on a year-over-year basis: No. 1 Las Vegas was down nearly 18 percent; No. 2 Merced, Calif. Was down 7 percent; No. 3 Modesto, Calif., was down nearly 28 percent; No. 5 Cape Coral-Fort Myers, Fla., was down nearly 19 percent; No. 6 Stockton, Calif., was down 33 percent; No. 7 Riverside-San Bernardino-Ontario, Calif., was down nearly 29 percent; No. 8 Bakersfield, Calif., was down 19 percent; No. 9 Reno-Sparks, Nev., was down nearly 18 percent; and No. 10 Phoenix was down nearly 9 percent.”

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How can you prove that a lender screwed up? One idea is to get something called a forensic mortgage loan audit.

The catch, says the Federal Trade Commission, is that such audits are “the latest foreclosure rescue scam to exploit financially strapped homeowners.”

“In exchange for an upfront fee of several hundred dollars,” says the FTC, “so-called forensic loan auditors, mortgage loan auditors, or foreclosure prevention auditors backed by forensic attorneys offer to review your mortgage loan documents to determine whether your lender complied with state and federal mortgage lending laws. The ‘auditors’ say you can use the audit report to avoid foreclosure, accelerate the loan modification process, reduce your loan principal, or even cancel your loan.”

Free Pass For Lenders

There’s a real tragedy here on several levels: First, lenders should be held accountable for properly maintaining mortgage accounts. How is it possible to know whether lenders seeking to foreclose have the records right without a careful review of the loan? In a sense, the FTC is giving a huge pass to lenders. It’s like asking Enron to vouch for its own accounting.

Second, imagine if a borrower is foreclosed and the lender seeks a deficiency judgment for the unpaid balance. Wouldn’t it be good to know how much is actually owed to the lender before a court makes an award?

Third, it is troublesome to have the FTC suggest that distressed borrowers should not seek help from licensed attorneys. The implication seems to be that all attorneys who work in the foreclosure defense field are somehow tainted, an implication which is nonsense.

Perjury

We know that lenders are not always right. For instance, the paperwork in so many Florida foreclosure cases has been so wrong, so often that the state court system decided in February that attorneys must verify that their claims are correct or face charges of perjury.

“When filing an action for foreclosure of a mortgage on residential real property,” said the Florida state court system, “the complaint shall be verified. When verification of a document is required, the document filed shall include an oath, affirmation, or the following statement: Under penalty of perjury, I declare that I have read the foregoing, and the facts alleged therein are true and correct to the best of my knowledge and belief.”

The reason for the rule, says Florida, is “(1) to provide incentive for the plaintiff to appropriately investigate and verify its ownership of the note or right to enforce the note and ensure that the allegations in the complaint are accurate; (2) to conserve judicial resources that are currently being wasted on inappropriately pleaded ―lost note counts and inconsistent allegations; (3) to prevent the wasting of judicial resources and harm to defendants resulting from suits brought by plaintiffs not entitled to enforce the note; and (4) to give trial courts greater authority to sanction plaintiffs who make false allegations.”

In other words, the Florida courts have found multiple instances where lender foreclosure claims were simply untrue.

And yet, the FTC says:

There is no evidence that forensic loan audits will help you get a loan modification or any other foreclosure relief, even if they’re conducted by a licensed, legitimate and trained auditor, mortgage professional or lawyer.

Some federal laws allow you to sue your lender based on errors in your loan documents. But even if you sue and win, your lender is not required to modify your loan simply to make your payments more affordable.

If you cancel your loan, you will lose your home and you will have to return the money you borrowed to your lender.

You can see the problem here: Audit fraud is obviously wrong, it’s a crime. It will not result in a mortgage modification. And a fraudulent effort to stop a foreclosure will only make things worse for borrowers. But the issue for many homeowners is NOT that they want to modify their loan, it’s that they want to avoid an improper foreclosure. How can borrowers get help when the FTC is warning against the use of even a “licensed, legitimate and trained auditor, mortgage professional or lawyer.” Is no one other than a lender qualified to review foreclosure claims?

Perhaps the answer is that we ought to license mortgage auditors. But until we do, what are homeowners supposed to do to protect their homes against unfair and incorrect foreclosure claims? What are borrowers supposed to do when overcharged by lenders?

It’s true that some attorneys have committed fraud. It’s also true that the overwhelming majority have not. The FTC’s recommendation is simply too broad.

The FTC — which has an exceptional record defending consumer interests — needs to offer better, more precise advice to the public. What, exactly, should borrowers do in the face of lender foreclosure claims which may be false or inflated?

The real point is that lender errors cannot be used to force a loan modification. However, lender errors should not be the basis of a foreclosure. Someone at some point needs to review lender foreclosure claims to see if they’re justified.

If you face a foreclosure claim defend your rights and get help from an experienced attorney or legal clinic. Speak with a HUD foreclosure avoidance counselor. See if pro bono legal services are available. A local community housing group may be able to help. Lastly, look into the government’s mortgage modification program, Making Home Affordable.

Can “Mortgage Loan Audits” Stop Foreclosures? is a post from: Refinance, Home Mortgage Loans & Rates, Home Equity Loan

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Truth is, a lot of people who enroll in the foreclosure prevention program don’t make it. The government reports that through April 299,092 borrowers received permanent loan modifications under Making Home Affordable — and also that 277,640 borrowers had been cancelled.

Now both Fannie Mae and Freddie Mac — organization nationalized by the federal government — have issued rules which says that when a borrower cannot get a permanent modification they then have the “choice” of either a short sale (what lenders call a preforeclosure sale) or a deed in lieu of foreclosure under HAFA — the Home Affordable Foreclosure Alternative program.

Payments To Borrowers

To qualify, says Freddie Mac, the “borrower must be more than 60 days delinquent and have cash reserves less than the greater of $5,000 or three times their current monthly mortgage payment.”

If you have been in the Making Home Affordable program and have been cancelled, and if your loan is owned by Fannie Mae or Freddie Mac, then speak with your lender about a short sale or deed-in-lieu of foreclosure under HAFA. To see if your loan is owned by either company go to the Making Home Affordable loan lookup page.

Feds Start New Short Sale & Deed-in-lieu of Foreclosure Options is a post from: Refinance, Home Mortgage Loans & Rates, Home Equity Loan

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