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It’s Now Illegal If You Are Being Charged Up Front For Foreclosure or Loan Mod Assistance

It’s Now Illegal If You Are Being Charged Up Front For Foreclosure or Loan Mod Assistance

If you are a homeowner facing a Michigan Foreclosures, you need to be aware and beware of MARS. Not the planet Mars, but MARS: “Mortgage Assistance Relief Services” Rule.

If you are using a third party to help you with your distressed house situation, be aware that unless they are an attorney, they need to comply with this FTC rule (effective December, 2010) and this means not charging you a fee up front for services. We are not attorneys so check this out with your own attorney. We are just updating you on the latest regulations to affect Michigan Sellers.

The following is from the FTC’s press release about the MARS Rule: “The FTC is issuing the Mortgage Assistance Relief Services (MARS) Rule to protect distressed homeowners from mortgage relief scams that have sprung up during the mortgage crisis. Bogus operations falsely claim that, for a fee, they will negotiate with the consumer’s mortgage lender or servicer to obtain a loan modification, a short sale, or other relief from foreclosure. Many of these operations pretend to be affiliated with the government and government housing assistance programs. The FTC has brought more than 30 cases against operations like these, and state and federal law enforcement partners have brought hundreds more.”

The MARS Rule regulates:
– Charging / Payment of fees by homeowners
– Disclosures that must be included in both contracts and advertisements
– Claims a “Mortgage Assistance Relief Service” are prohibited from making

The good news in all this confusion is that we are MARS compliant. We will never charge you a fee (upfront, during the process, or at closing). We keep everything about your situation confidential and we will not put you in a worse situation. So, call an attorney to find out more about MARS if you are already getting help from a third party, especially if they are charging you fees. Give us a call if you are not using a third party and want someone who is current on the regulations and complying. Just another way we work harder than anyone to help get you back to better times!

Ann

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Ah Government Programs…

Ah Government Programs…

I think most of us can agree that the government’s intentions are always good, and when they take the time to become experts in the problem, they usually end up helping. I think most of us would also agree that they are not experts in a situation, they more often than not “muddy the waters” of that situation.

Approximately 1.24 million homeowners facing financial hardship enrolled in government aid programs to keep or sell their homes. An estimated 340,000 have received permanent assistance and are meeting the terms of their modified loan. That’s less than 3%.

Now, I’m sure that the current administration had the best of intentions; they saw a crisis and felt the need to intervene. That’s all well and good, but many people see it as an imposition, an intrusion into an industry by a group of people who don’t fully grasp the nature of that industry. Think of it this way – it’s sort of like a doctor observing a growing epidemic and deciding something needs to be done. So he takes it upon himself to instruct scientists and pharmaceutical companies how to create a pill to cure the epidemic. The scientists and pharmaceutical companies would understandably be frustrated with the doctor because he would be pushing his ideas about something he really doesn’t understand.

Now imagine if the doctor could pass a law forcing the manufacture of his pill. The results could be unproductive, if not outright disastrous.

For those of us who work with borrowers in need of assistance, these “help for homeowners” programs are frustrating and an obstacle to hurdle. Frankly, it’s almost a joke due to their appalling ineffectiveness. Again, these programs have worked for less than 3% of homeowners in default.

If you’ve tried to take advantage of one of these programs with your lender, and you are finding yourself in the 97% who can’t get results, maybe a Michigan short sale is the right option for you. Give Emily a call today to find out.

Melissa

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Will the Government’s New HAFA Short Sale Work For You?

Due to the overwhelming number of homeowners out in need of short sales, and the success rate of said short sales being extremely low, the government has stepped in to attempt to help out. The new “Home Affordable Foreclosure Alternative” program has been created in order to give mortgage companies an incentive to close these deals. But is a HAFA short sale right for you? Answer this little questionnaire, and we’ll find out.

  1. During the short sale process (which can take several months) are you able to make mortgage payments at a minimum rate of 31% of your gross (before tax) income?
  2. Are you currently living at the property?
  3. Do you have a second mortgage that is willing to accept only 3% of the balance of that loan as payment in full?
  4. Are you willing and able to keep paying utilities, assessments, association dues, and interior and exterior maintenance costs?
  5. Is your property in good condition, or are you willing to bring it up to a good condition (and keep it there)?
  6. Are you willing to take the chance that the short sale may be denied, in which case you will be forced to accept a deed in lieu of foreclosure? (turning the house over to the bank – yikes!)
  7. Will you agree to let the bank decide how much your house is worth, instead of you deciding on a value with your REALTOR®?

If you answered no to one or more of these questions (there are a few more stipulations, by the way) then you will be denied for a HAFA short sale. The good news is that you can still do a short sale the old fashioned way. And the better news is that we can take all of the stress out of it by doing it for you. You won’t have to make any repairs to your house, and you will never have to give us (or anyone involved) any money. Give Emily a call at (269) 685-5921 today and find out what we can do for you!

Joel

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Making Home Affordable – Do You Qualify?

You’ve probably been hearing a lot of talk about President Obama’s Making Home Affordable Plan, but aren’t sure if you qualify or not. Unfortunately, chances are high that you don’t – rigid restrictions set in place and the newness of it all (coupled with bad communication and poor customer service – just my opinion) are making it hard to people to get the help they need. I’ve been mulling around the Making Home Affordable website for a few days, and here’s what I’ve found.

If you are current on your loan, you could qualify for a Home Affordable Refinance. By current, they don’t mean that you are caught up with your payments. If you have been over 30 days late in the last year, you are not considered current (crazy, I know). So let’s say you are current by their standards. In order to refinance, your loan must be backed by Fannie Mae or Freddie Mac. This very quickly makes about half of all families ineligible. Another stipulation is that your first mortgage cannot be more than 125% of the value of your house. For example, if your mortgage is $150,000 your house cannot be worth less than $120,000. This is a huge problem for most families in Michigan due to the rapid decline in house values. Sill eligible? Let’s keep going. While refinancing from an adjustable rate or balloon payment to a fixed rate is definitely an improvement in the long run, the problem lies in the fact that your mortgage payment may not go down with a Home Affordable Refinance. This means that if after the refinance, you still do not have the ability to make your payments, a refinance is not for you.

If your mortgage is not backed by Freddie Mac or Fannie Mae, there is another option out there – the Home Affordable Modification. With this option, if you are behind on your payments may qualify for the program. The main problem with the modification is that only the first mortgage can be modified. In order to qualify, your first mortgage payment has to be more than 31% of your gross monthly income. That is, if your family is making $35,000 a year, your first mortgage payment must exceed $904 a month. That seems extremely high to me. Push that income up to $50,000 and your payment has to exceed $1,290! Many times it is not the first mortgage that is causing problems for individuals – it’s the pesky equity loan or second mortgage. Remember, that 31% rule isn’t taking these into consideration. Add another $250 onto that, and your $1,290 payment goes up to a whopping $1,540. Another reason many people have fallen behind on their mortgages is because they have income properties that didn’t quite work out, or were affected by the housing crisis. If you don’t live in the house, you are not eligible for a Home Affordable Modification.

So, you meet the stringent requirements for either a the Refinance or Modification programs? Now comes the fun part! You get to call your mortgage company and ask for one of these options. The Making Home Affordable website tells you to “be patient” because these programs are newly implemented, and it might be a while before all applications can be processed. According to CNN.com, only 6% of eligible families have actually been helped so far. I’ll give you another reason to be patient: Most Banks Are Slow. I know – I’ve been working for them and with them for the last two and a half years. They lose your paperwork, they don’t contact you (except to collect money), and there is poor communication within. You’ll get customer service representatives giving you the wrong information or passing you off to someone else. Be prepared for some serious aggravation and time loss.

If you are one of the majority of people who don’t qualify for these programs or simply don’t have the patients required, and want to avoid a Michigan foreclosure, give us a call. We will never ask you for any money, or to do any repairs to the house. We promise that we will never put you in a worse situation, and that we will work harder than anyone else to give you a permanent foreclosure solution. We also promise to keep everything confidential. Give Emily a call at 269-385-5921 – we look forward to hearing from you!

Holly

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The Bison Eventually benefitted from Government Help, but Will You?

On our recent trip out west, we visited Custer State Park in South Dakota which is famous for having one of the largest Bison herds in the nation.  While we were at the park, we went on a Bison Safari where we learned lots of interesting facts about the bison.

bison-herd

For example, do you know that in the late 1800’s, in a few short years, the number of bison in the West went from millions to thousands all because the government decided that hunting them down would force native Americans to move west in search of more food allowing for white settlers to move into the Native Americans territory more easily. At some point, people realized this was a bad plan and forces rose to protect the bison just in time before they were almost hunted to extinction. Not to mention the devastation to the Native Americans who were also hurt by these policies. Now a large number of bison live under “federal protection” in state and national parks.

In the interest of being politically correct, all I will say is that what started out as a popular government intervention, almost resulted in disaster.

I couldn’t help thinking how some of today’s government programs, particularly those aimed at “fixing” the housing crisis, while sounding good and being popular, are not always the best solution for the people they intend to help. In many cases, they help very few people and just delay the inevitable for others all while putting the economy in a deeper, longer-lasting hole.

If you are facing a Michigan Foreclosure, and decide to try one of these programs, just go into it with your eyes wide open. Don’t expect a miracle solution to your complex problem. Be smart enough to realize when it is just not going to work and start looking for other solutions. In many cases, switching strategies is the best solution. We can help you evaluate your options.

If you realize you need to get out from under the burden of a house you can no longer afford, give us a call. We can help with a proven program that has helped countless other families preserve their credit and get a fresh start. If you wait too long, it could become too late for us to help and you will be on your own to fight for your financial survival.

Ann

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Why Put Off the Inevitable?

I tend to put unpleasant things off. I know that isn’t so unusual – who likes to go to the doctor, or do their taxes, or have a root canal, etc? But we all know that putting things off isn’t always the best thing to do. Take the new Michigan foreclosure laws. Now I am not an attorney, and I haven’t read all the points of the new law but my understanding is that lenders are now required to give borrowers 90 days to attempt a work out if the borrower meets certain criteria.

Is this better?

Sure, if you are facing a Michigan Foreclosure and your hardship is over and you have a chance to successfully do a Work Out.
If your hardship isn’t over and especially if you don’t have income, you will not be able to successfully do a Work Out. Remember the old saying that doing the same thing, the same way, over and over will not lead to different results.

Why put off the inevitable foreclosure? Let’s use those extra 90 days to successfully complete a short sale. Call us today and let us help you get back to better times faster.

Ann

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Michigan “Lifeline Law”

You may have been hearing a lot about the new Michigan foreclosure “lifeline law”, and you may be wondering, what does it really mean?

Currently, Michigan is sixth in the nation for foreclosures; clearly something needed to change. But is this new legislation really the answer?

If you’ve missed a few mortgage payments recently, your lender may have started the foreclosure process. What this now means is that you should receive two letters notifying you of your right to delay the foreclosure 90 days by working with a housing counselor. However, you must contact a counseling agency within 14 days or your rights will be waived.

Should you choose to meet with a counselor, you will need to have income information, including your 2008 tax return and year-to-date proof of your income. Each lender or investor will have their own guidelines which will apply to your mortgage. However, even if you qualify for a loan modification (less than 5% of applicants do, so don’t hold your breath), your lender may choose not to agree to the proposed modification. This means that they may continue the foreclosure proceedings.

If this situation applies to you, it is imperative for you to know your options and to act immediately. To find a lender-approved counselor, you may contact the Michigan State Housing Development Authority at 866-946-7432, or the “Hope Hotline” at 888-995-HOPE.

If you have been turned down for a loan modification and feel you have no other options, a short sale may be right for you. Of course short sales are our specialty and are certainly much better than a Michigan foreclosure. The catch of course is that if we don’t start soon enough, it may be too late, so call as as soon as you are out of options.

Melissa

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Loan Modifications – A Word From A Fellow Mastermind Member

If you are facing a Michigan Foreclosure, one of the ways we are able to help you resolve your situation is by staying on top of changes in laws, policies and the housing industry in general. One way we do this is by being part of a national mastermind group where we get cutting edge information and techniques. Here is what one of our fellow members had to say lately about loan modifications.

“Loan Modifications seem promising until one examines how ineffective they have been. The goal of the Obama Administration was to incentivize banks to do loan mods in the expectation that 3 to 4 million homeowners would receive the assistance they needed to stay in their homes. Thus far, and it’s early, some 55,000 distressed homeowners have been helped. A major block has been the reluctance by the banks to commit to loan modifications out of concern for the downward spiral of housing values.”

“No one can argue that the goal of keeping homeowners in their houses is worthwhile. The trouble is that those that promote them often make up what they lack in foresight with sincerity, which isn’t exactly good for … the homeowner…”

“Here’s the point: Unless banks do something to reduce principle balances well below current (house) value, most loan modifications will keep homeowners trapped in debt with a house that is over-leveraged and therefore one that they will not be able to sell when needed (job issues, divorce, medical, etc). The lost home equity isn’t coming back anytime soon. Guess where many of those homeowners who complete loan mods may end up? Back in Foreclosure.”

Excerpt from The SREC Monthly Mentor Newsletter, Volume 1-3, June 2009

Well said Ted! Give Emily a call and ask her what options we can offer that will provide a permanent solution and help you get back to better times.

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Are You a Tenant? This Blog is for you.

Are you a tenant in a property that just had a foreclosure notice posted on the door? Did you receive a foreclosure notice addressed to your landlord in the mail? Did you receive mail addressed to your landlord from Realtors, Attorneys and investors wanting to help with the foreclosure? Surprised? If you answered yes to any of these questions, then this blog is for you.

What do you do if any of the above happens? First thing you should do is call you landlord and tell them to call Emily (aka “Mom”) at 269-685-5921x 203 to discuss their options.

The second thing you should do is educate yourself on foreclosure procedures and how it affects you as a tenant. You can do this by calling Emily yourself (you don’t need your landlord’s permission).  Also call Emily if you can’t reach your landlord when any of the above happens.

President Obama recently signed a new law requiring that a 90 day notice to vacate be given to tenants residing in properties facing foreclosure. We are not attorneys, so you should consult an attorney about how this new law affects your specific situation. Our understanding of the law is that it does not apply to all loans, but does apply to most. The key is who the investor or institution is that backs the loan on the property. Consult an attorney also about how this 90 day period affects the time left on your lease.

The key is that the sad cases we heard in the past where tenants are evicted with no notice because of foreclosure, should be a thing of the past. You should get at least 90 days notice to vacate, but don’t count on it unless you are proactive.

Even though there are now laws to protect tenants, the best outcome for everyone will be reached if you and your landlord educate yourselves and make informed decisions. Give our team a call, we are here to help.

Ann

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Understanding The Housing Recovery Plan

We have gotten a lot of calls about what President Obama’s Housing Affordability and Stability Plan really means. Based on our research, I’ve summarized what we’ve learned so far. At this point, not all of the details are available as they still seem to be working them out.

I’ve tried to keep this summary as simple and basic as possible. Why? The more we read in the press, the more complex and unclear the plan seems to be. I’ve also tried to limit the overview to the situations most common with the families that call our office daily.

Keep in mind that if your house has already gone to the foreclosure sale (i.e. you are in the “redemption period”) none of these options are available to you.  Your only options during the redemption period is to pay off your loan(s) in full, or to sell via a short sale.

There are two parts to the plan: Affordability and Stability

Affordability

This portion of the plan will give you a chance to refinance your mortgage to current interest rates, thereby making your payments more affordable. If you are currently facing high interest rates following an adjustment in your ARM (adjustable rate mortgage) interest rate, this will give you a chance to switch to a lower fixed rate mortgage. This is awesome news, but watch out for the “gotchas”.

Do You Qualify under the “Affordability” Portion of the Plan? (check this government web site for more)

  • You must have a mortgage guaranteed by Fannie Mae or Freddie Mac.
    • Call us and we’ll help you figure out if this is the case for your loan. If it’s not, you can not participate.
  • You must owe between 80% and 105% of your house’s current (in today’s market) value.
    • This is a HUGE gotcha for almost everyone we talk with. Why? Because if you financed your house at 100% sometime over the last 5 years, the value has likely gone down drastically here in Michigan and you will owe more that 105% of the current value. If you are like most people that call us, this will eliminate this option for you.
  • You must be current on your payments. “Current” means that you haven’t been more than 30-days late on your mortgage payment in the last 12 months.
    • Yet another HUGE gotcha. This portion of the plan will not help you if you’ve fallen behind already.
  • Your interest rate will be a current “market” rate (which may actually raise your payment in some cases).
  • If you have mortgage insurance (like “PMI”), the insurance company must agree to insure the modification of your loan.
  • Additional restrictions apply if you have a 2nd mortgage (call us for details)
  • Your lender does not have to participate!
  • If you owe more than 105% of the current value or if your loan is over $417,000, you will not qualify for this portion of the plan.

Stability

This portion of the plan will help you if your payments have risen to 40% or more of your monthly income. Your lender is being given financial incentives from the government to participate in this program, but they have a choice: Your lender does not have to participate!

Do You Qualify under the “Stability” Portion of the Plan? (check this government web site for more)

  • If you owe more than your house is worth (I have not seen a definition of this yet).
  • If your debt to income ratio is “high” (I have not seen a definition of this yet).
  • You must still live in the house (if you don’t, you will not qualify)
  • If you owe under $417,000
  • If you qualify: Prove you can afford the new payment (plus your 2nd mortgage – see below) at an interest down to no more than 2%.
  • If you didn’t lie about your income when you received your current loan (remember those crazy “no doc” loans?)

The major tool for reducing the payment is rate reduction, with balance reductions only a last resort.  So if you’re “upside-down”, you will remain that way.

Additional details on this portion of the plan are mostly speculative at this point.

There is a major problem with this portion of the plan:  The $75 Billion allocated for this is to give incentives to first mortgage holders, not second mortgage holders.  So, say your first mortgage is offering a loan modification that works for you.  They are doing this because of the money they will get from the government.  What about your second mortgage?  Will you still be able to make that payment?  If not, they won’t just “go away”, they’ll want to get paid.  Because this portion of the plan does not allocate funds to second mortgages holders, you still may not be able to make your total mortgage payments.

Remember, at this point, the guidelines are not finalized and the two things are clear: You need to qualify (these programs will not help everyone) and your lender does not have to participate. Don’t waste your time hoping these programs will help you if you learn now that they will now. Based on the restrictions, you still may end up looking dead ahead at a Michigan foreclosure. If that’s you, we can still help by getting you out from under it so you can make a fresh start. Call us to learn about all of your options.

Joel

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