2010 April | - Part 2

Update on Foreclosure Mediation

April 2nd, 2010 Posted in loan modification

Apr, 02 2010

Comments Off

Captaloans has a number of foreclosure mediators using our CRM to manage their case load so we have been watching the legislation. Here is a great article from Keith on the status of foreclosure mediation. You can see the full article here: http://www.mediate.com/articles/foreclosureupdate5.cfm

Members of Congress from Ohio, California and Florida in February introduced the Foreclosure Mandatory Mediation Act, H.R. 4635, as companion legislation to S. 2912. The federal legislation would require mandatory mediation by lenders of loans with federal guarantees or federal insurance. The required one-time mediation would involve both the mortgagor and a housing counseling agency and would be paid for by the lender. Federal Information & News Dispatch (March 3, 2010) (Subscription Required)
While the Florida Supreme Court ordered each of the 20 circuit courts in the state to establish its own foreclosure mediation process, only three circuits have complied with the order to date. Florida was hit with an additional 296,000 foreclosure filings in the last quarter of 2009, pushing the number of pending foreclosures to 456,000. Jacksonville.com (February 13, 2010)
Nevada judges have stated publicly that they will not impose loan modifications even if lenders do not negotiate in good faith in mediations. RGJ.com (January 24, 2010)
New Hampshire has begun a Foreclosure Mediation Program which is voluntary for homeowners and free to both borrowers and lenders. The program is being funded by grants from several sources. Nashua Telegraph (January 18, 2010); Foreclosure Mediation Program
Lenders attempting to foreclose on primary residences on the Big Island of Hawaii must now notify borrowers of their right to mediation by serving a mediation notice along with other documents. Star Bulletin (January 21, 2010); Judiciary Press Release (January 20, 2010)
Providence, Rhode Island has mandated a foreclosure mediation process, and the City Council is seeking to add a $2,000 fine for banks or lenders who fail to attempt to renegotiate mortgages with homeowners before filing a deed of foreclosure. Projo.com (January 25, 2010)
Maryland’s governor is pushing for the emergency legislation he introduced to institute a mandatory foreclosure mediation program in the state, and would like lenders to support the plan. Lenders remain concerned about anything that would slow down the foreclosure process. Maryland looked to South Carolina’s foreclosure prevention efforts, which require a showing that borrowers are not eligible for modification under the federal Home Affordable Modification Program prior to foreclosure. Governor O’Malley Press Release (February 16, 2010); Daily Record (January 18, 2010)
Although the governor of Minnesota vetoed the Homeowner-Lender Mediation Act in 2009, it has been reintroduced this year and the Minnesota attorney general will again seek enactment. Legal Newsline.com (January 6, 2010)

California, florida. mortgage, foreclosure mediation, mediators

Getting a mortgage in todays climate

April 1st, 2010 Posted in loan modification

Apr, 01 2010

Comments Off

With Loan Modifications and short sales in full swing the mortage industry has changed dramatically in the last 18 months. A few details of changes that affect borrowers.

After the mortgage back security implosion where subprime and stated income loans (that eventually went into default in large numbers) were packaged and sold to investors all over the world there were some much needed changes imposed in the industry in hopes of protecting the consumer and also tax paying citizens.

New laws have been put in place to change the way appraisals are performed, and the manner in which costs are incurred and disclosed to clients. In addition, mortgage originators are now required to register with a national database and to be fingerprinted. That is some serious stuff and from the way things ran in the past appears to be a great move.

INCOME DOCUMENTATION
Gone are the days of the “stated income” loans. They may return someday but I would not hold your breath. This could be problematic for self employed folks who try to “expensed” much of their income in order to avoid taxation. They are not eligible for a new mortgage in most cases. But I guess this is fair. I mean if they are trying to avoid paying taxes they cant really complain.

Underwriting guidelines governing LTV (loan to value), FICO scores, and DTI (debt to income) ratios for all loans are much more conservative than in the recent past for obvious reasons. Unfortunately the pendulum may have swung too far in the conservative direction at present but this is to be expected. For those of you who have a mortgage try to hang on to it but you might not be able to get one again for a while!

Virtually all lenders now require IRS transcripts of individual tax returns prior to underwriting approval. This ensures that income reported on the application and attending documentation is accurate in an attempt to avoid fraud. As a result, it is standard practice now to collect full income documentation, to include two year’s federal tax returns with all schedules, W2’s, 1099s, and paystubs evidencing current employment. Also required are bank and asset/saving statements for at least one month, including all pages of the statements. Online statements are not allowed unless they evidence the borrower name and address on them.

It is back to “full documentation” in the loan world, just like the old days