Upside Down Mortgage

Archive for November, 2008

Mortgage Modification For Unemployed

Question: I'm unemployed and living off savings, should I not stop paying mortgage to WAMU and see a loan modification?

I'm 50 years old and a professional looking for work and my wife is going through breast cancer treatments. My loan is a 5.7% interest only and I owe a little more than the house is worth. Should I seek a loan modification from WAMU? I have enough savings for 6 months.

Answer: I would not just stop making payments. A better avenue would include one of 2 approaches.

1. Talk to a loan officer at WAMU to see if you can negotiate a lower rate or even a refinance. With the economy the way it is right now they are more willing to do this rather than the alternative of not receiving any payments or start any proceedings of foreclosure - especially when you tell them your unfortunate circumstances.

2. A free service called Consumer Credit Counseling Services can negotiate on your behalf to possibly reduce the interest rate, and thus your monthly payment you are making to WAMU. They also offer other services of reorganization of your debt / what you owe creditors that may better help you as well. Some of their additional services (should you opt into it) may cost a small nominal amount, but save you in the long run.

Just not paying is not the answer - remember, the initial actions on a person defaulting on a loan without speaking to a person results in actions first taken by their computer system.

Lastly, I wish you and your wife well and heartfelt positive wishes on her ordeal with her breast cancer treatments. Medical technological breakthroughs are high nowadays so keep positive as you maintain your loving support towards her.

Green Shoots or Economic Delusion: Is the Recession Really Over? pt. 2

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Mortgage Fraud Conference

A leading identity theft expert used the credit industry's annual conference to show that the government has massively over-hyped public fear of the extent of identity fraud to sell its Identity Cards Bill.

He also warned the credit industry not to join the bandwagon by selling over-priced prevention products to over-anxious consumers, and to help combat the crime by supporting victims more readily.
Barry Stamp, Joint Managing Director of " target="_blank">www.checkmyfile.com/default.asp">checkmyfile.com, presented to leading credit industry figures at the Institute of Credit Management's National Conference.
He showed how the government's estimated figure of £1.72bn worth of losses to the UK economy, caused by identity fraud, has been massively over-inflated. In particular, these include the costs of security checks for routine government functions and losses that reasonably cannot be included within the general understanding of identity fraud. This has whipped up public fear and in doing so is likely to obtain wider public support for the introduction of identity cards.
"The largest single component of the government's £1.72bn estimate is £504.8m worth of losses relating to plastic card fraud, taken from the figures reported in April 2005 by APACS. Closer examination of the APACS figures show that losses from identity fraud account for just over 7% of overall card fraud, so the true losses are only £36.9m. This example is one of many that clearly illustrates how the government has used a creative approach to the definition of what is and is not included within identity theft losses," said Stamp.

"Going on to include the £62.8m cost of the measures to counter identity fraud when processing passport applications, and another £34.8m for things like unpaid fines where the offender doesn't turn up at court are further examples of how the definition has been stretched".
"In reality, identity fraud is a fast growing crime, but losses in the UK are probably running closer to £150m at the moment".

Stamp warned: "While the risk is real, and consumers need to increase their awareness, there really is no excuse for the government to strike fear of falling victim to identity theft into consumers for political advantage. If the credit industry exploits that fear to promote over-priced identity theft protection products to replace waning income streams from payment protection insurance, then that would be totally unacceptable."

"If the problem is as large as it is claimed to be, then I would very much like to know why Police resources have not been strengthened to combat the crime. Of the many hundreds of cases of identity theft that checkmyfile.com has reported to the Police, not one has been pursued to court action."

"Any consideration of the effectiveness of identity cards should also bear in mind the state of some of our existing national databases." says Stamp. "In the UK, our government just isn't very good at collecting personal data or maintaining it, so what reasonable person might assume that the National Identity Register might be any different? In the UK we don't even have a central point of reference to check whether cards or any other identification documents are lost or stolen, as exists in other countries, nor have I seen any plans to build one."

Stamp, author of ‘Identity Theft, Prevention and Victim Assistance', and whose company checkmyfile.com provides consumers with access to a wide range of databases, and supplies identity restoration services to a leading insurance company, urged credit managers who attended the ICM National Conference to follow the lead of some lenders who offer free identity theft prevention advice and to work together to combat the crime.

Philip King, the newly appointed Director General of the ICM, fully supports such an industry initiative. He said: ‘Credit managers working together have shown in the past that losses from criminal actions, such as mortgage fraud, can be prevented by sharing intelligence. Identity theft presents a very similar challenge to our industry and we now need to focus on addressing the issue professionally".

About the Author:

Richard Goedegebuur is press relations officer with " target="_blank">www.checkmyfile.com/default.asp">checkmyfile.com, the Uk's leading online supplier of credit files to the consumer. The website also provides consumer credit advice, post code relevant information - such as area property prices, cheapest petrol stations, average credit scores for a post code, and a free stolen car checker.

Source - Identity theft - the most over-hyped fear of our time

Sen. Leahy Holds Press Conference On Fraud Enforcement Legislation

Mortgage Default Projections

July 1, 2009

The Obama administration is widening its mortgage refinancing program to allow more borrowers hit hard by falling home prices to take part.

Borrowers whose loans are now worth up to 125% of their home's value are now eligible to refinance their homes under the Obama foreclosure prevention plan announced in February. Previously, the limit was 105%.

The move acknowledges that home prices in many areas have fallen so far that many people were shut out of the program.

Some 67% of homeowners in Las Vegas -- one of the hardest hit areas and where Housing Secretary Shaun Donovan announced the expansion Wednesday -- owe more than their homes are worth.

More than one in five borrowers are now underwater, with homes in parts of California and Florida losing more than 50% of their value, according to Zillow.com, a real estate Web site. Some 20 million people own homes worth less than their mortgages.

"The president's Making Home Affordable plan is already helping far more than any previous foreclosure initiative and with today's announcement we will extend its reach still further," said Donovan.

How many more people will be drawn to the program now, however, remains a question, especially since mortgage rates are on the rise. Administration officials do not have an estimate.

Refinancings slow to ramp up

Some 20,000 loans have been refinanced so far, according to the Treasury Department.

The initiative waives the requirement that homeowners have at least 20% equity in their home, allowing them to take advantage of today's lower rates. Homeowners must still meet other criteria, including being current on their payments and having loans that are owned or backed by Fannie Mae or Freddie Mac.

Wednesday's expansion means those with homes worth $200,000 and mortgages as large as $250,000 can still qualify. Previously, these borrowers could not have loans exceeding $210,000.

The program, however, has been slow to ramp up. Borrowers have complained that banks are not approving their applications. The Mortgage Bankers Association last week slashed its 2009 forecast of originations because fewer refinancings were being done than they originally expected. The group said only 13,000 were done in the three months after the plan's launch.

The administration has projected that 4 million to 5 million mortgage borrowers would be helped. A Treasury official Tuesday said that the figure applied to those who would be eligible, not necessarily those who would participate.

Administration officials do not have an updated figure of how many people would be eligible or participate now that the criteria has been widened.

The recent uptick in mortgage prices has blunted the plan's benefit, as well. The Federal Reserve has been buying mortgage-backed securities and long-term Treasurys in an effort to lower rates.

It worked for a while. Rates hit a low of 4.84% on April 28, but are now at 5.45%, according to HSH Associates.

Since mortgage rates have been in the 6% range in recent years, refinancing to the mid-5% range may not be worth it, said Keith Gumbinger, vice president at HSH Associates. A homeowner with a $200,000 mortgage at 6% would see a savings of about $64 a month if he refinanced at 5.5%, and that's before closing costs.

"Are interest rates low enough to warrant getting into the process?" he said.

The administration's announcement comes on the same day as an industry group reported that the demand for refinancing dropped 30% last week. In addition to higher rates, rising unemployment is contributing to the decline.

Borrowers with Freddie Mac loans who refinance through their current servicer can apply right away, but those who want to go through a different lender must wait until Oct. 1. Those with Fannie Mae mortgages must use their current lenders and wait until Sept. 1.

A second part of the program lets eligible borrowers who are in default -- or at risk -- lower their monthly payments to no more than 31% of their pre-tax income. This can help those who are not making as much at their jobs or who have monthly payments they can't handle. Homeowners, servicers and mortgage investors can receive incentives to entice them to participate in the program.

Banks have extended more than 200,000 trial modification offers, according to the Treasury Department. Homeowners must make three monthly payments on time before the modification is made permanent.

About the Author:

Peter is one of the nation's leading authority on foreclosure prevention, attorney performed loan modification and loss mitigation strategies. His firm The Loan Modification Network connects homeowners with a team of specialsts in all fifty states to assist homeowners in foreclosure prevention solutions and loan modifications. Call 1-800-680-0355 or go to http://www.us-loan-modification.com to learn more.

Source - Obama extends mortgage refinancing program