Tag Archives: HOEPA

The Doan deal

25 Jan

California Civil Code 2923.6 enforces and promotes loan modifications to stop foreclosure in the state. California Civil Code 2923.6 (Servicer’s Duty under Pooling Agreements) went into effect on July 8, 2008. It applies to all loans from January 1, 2003, to December 31, 2007 secured by residential real property for owner-occupied residences.

The new law states that servicing agents for loan pools owe a duty to all parties in the pool so that a workout or modification is in the best interests of the parties if the loan is in default or default is reasonably foreseeable, and the recovery on the workout exceeds the anticipated recovery through a California foreclosure based on the current value of the property.

Almost all residential mortgages have Pooling and Servicing Agreements (“PSA”) since they were transferred to various Mortgage Backed Security Trusts after origination. California Civil Code 2823.6 broadens and extends this PSA duty by requiring servicers to accept loan modifications with borrowers.

How does this law apply?

Attorney Michael Doan provides this example of how the new law applies in his article entitled “California Foreclosures: Lenders Must Accept Loan Modifications” on the Mortgage Law Network blog. We removed the borrower’s name from the example for the sake of privacy.

A California borrower’s loan is presently in danger of foreclosure. The house he bought 2 years ago for $800,000 with a $640,000 first and $140,000 second, has now plummeted in value to $375,000. The borrower can no longer afford the $9,000 per month mortgage payment. But, he is willing, able, and ready to execute a modification of his loan on the following terms:

a) New Loan Amount: $330,000.00

b) New Interest Rate: 6% fixed

c) New Loan Length: 30 years

d) New Payment: $1978.52

While this new loan amount of $330,000 is less than the current fair market value, the costs of foreclosure need to be taken into account. Foreclosures typically cost the lender $50,000 per foreclosure. For example, the Joint Economic Committee of Congress estimated in June, 2007, that the average foreclosure results in $77.935.00 in costs to the homeowner, lender, local government, and neighbors. Of the $77,935.00 in foreclosure costs, the Joint Economic Committee of Congress estimates that the lender will suffer $50,000.00 in costs in conducting a non-judicial foreclosure on the property, maintaining, rehabilitating, insuring, and reselling the property to a third party. Freddie Mac places this loss higher at $58,759.00.

Accordingly, the anticipated recovery through foreclosure on a net present value basis is $325,000.00 or less and the recovery under the proposed loan modification at $330,000.00 exceeds the net present recovery through foreclosure of $325,000.00 by over $5,000.00. Thus, California Civil Code 2823.6 would mandate a modification to the new terms.

This new law remains in effect until January 1, 2013. Restructuring your mortgage will stop foreclosure and lower mortgage payments. Depending on your circumstances, you may also be able to lower your interest rate, as well. Visit the “Get Started” page to find out if you can benefit from this new California law and avoid foreclosure.

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My plan for Loan Modifications i.e. Attorney loan mod

25 Jan

Recent Loan Modification studies have shown that a large percentage of traditional loan modifications put the borrowers more upside down than when they started.
Unfortunately many loan mods are leaving people with higher monthly payments. In many loan modifcation the money you did not pay gets tacked on to the back of the loan… Increasing your loan balance and making you more upside down. This is why over 50% of all loan mods are in default. They are not fixing the problem they are just postponing it.

Before you go into default on your loans at the advice of some former subprime loan seller, make sure you understand that absent finding some legal leverage over the lender you have a good chance of seeing your payments going up.

Our Loan Modification program includes

1. Upside Down Analysis

2. Qualified Written Request and offer of Loan Modification

3. Letter informing lender of clients election to pursue remedies carved out by recent California Law under 2923.6 and or Federal Programs under the Truth in lending Act and the Fair Debt collection practices Act.

4. Letter Disputing debt (if advisable)

5. Cease and Desist letters (if advisable)

6. Follow up, contact with negotiator, and negotiation by an attorney when needed.
By now many of you have read about all the Federal Governments Loan Modification Programs. Others have been cold called by a former loan brokers offering to help you with your Loan Modification. Its odd that many of the brokers who put people into these miserable loans are now charging people up front to get out of the them.

Before you spend thousands of dollars with someone, do an investigation:

1. Is the person licensed by the California Department of Real Estate? Or, the California State Bar?

2. Are your potential representatives aware that have to be licensed according to the DRE?

3. Are they asking you for money up front? They are violating the California Foreclosure Consultant act if they are neither CA attorneys nor perhaps Real Estate brokers in possesion of a no opinion letter from the California Department of Real Estate? Note… if a Notice of Default has been filed against your residence only attorneys acting as your attorney can take up front fees. Don’t fall for “attorney backed” baloney. Are you retaining the services of the attorney or not? Did you sign a retainer agreement ?

4. If your potential representative is not an attorney make sure he or she is a Real Estate Broker capable of proving their upfront retainer agreement has been given a no opinon letter by the DRE. (As of November 2008 – only 14 non attorney entites have been “approved by the DRE.)

5. If somone says they are attorney backed – ask to speak with the attorney. What does attorney backed mean? From what we have seen it is usually a junk marketing business being run by someone who can not get a proper license to do loan modifications.

6. Find out how your loan modification people intend to gain leverage over the lender.

7. If you are offered a loan audit or a Qualfied Written Request under RESPA letter – will an attorney be doing the negotiating against the lender? Will you have to hire the attorney after you pay for your loan audit? Doesn’t that put cart before the horse?

8. Will it do you any good to have a loan audit done if you later have to go out and retain an attorney. You want to retain their services of an attorney before you pay for the audit. The loan audit is the profit center; negotiation takes time.
9. What kind of results should you expect?

10. Who will be doing your negotiating?

11. Will the Loan Modification request go out on Legal Letterhead?

12. How much will you have to pay? Are you looking for a typical loan mod result or are you looking to leverage the law in the hopes of getting a better than average loan mod result.

13. What if your are not satisfied with the loan modification offered by the lender?

14. Should you go into default on both loans prior to requesting a loan modification? Why? What happens if the loan mod does not work out to your satisfaction? (very important question.)

15. Will an attorney review the terms of your loan modification with you? Will you have to waive your anti-deficiency protections if you sign your loan modification paperwork? Will an attorney help you leverage recent changes in California law in an attempt to get a substantial reduction in the principle?

2923.6 complaint

22 Jan

form29236complaint

HOEPA audit checklist

18 Jan

tilaworksheet-2

Never sign a stack of papers…

17 Jan

FORGERY: This criminal case involves a conviction for forgery of a deed of trust. [NOTE: The crime of forgery can occur even if the owner actually signed the deed of trust. The court pointed out that “forgery is committed when a defendant, by fraud or trickery, causes another to execute a document where the signer is unaware, by reason of such trickery, that he is executing a document of that nature.” people_v_martinez

Charged minorities thousands of dollars more Hispanic's borrower charges 55% more

6 Jan

GreenPoint Brokers Targeted by New York
HCI Mortgage, Consumer One Mortgage settle with attorney general
January 5, 2009

Two New York mortgage brokers have settled charges that they charged minorities thousands of dollars more in fees, while a third broker faces a lawsuit by the state and more brokers face investigations. The actions were prompted by an investigation into defunct wholesaler GreenPoint Mortgage Funding Inc.
HCI Mortgage and Consumer One Mortgage have entered an agreement with New York’s attorney general, a press release today said. Between the two companies, there are more than 20 branches throughout the state.
The two brokers will pay $665,000 in restitution to around 455 black and Hispanic borrowers, according to the announcement. The also agreed to establish a standard fee schedule, monitor pricing to minorities and report lending details to the state.
Both brokers are accused of charging minorities higher fees than similarly-situated White borrowers.
The attorney general conducted an investigation with the New York State Department of Banking into discriminatory practices by mortgage brokers. The investigation was triggered by the state’s investigation into GreenPoint Mortgage Funding Inc. after it found that Home Mortgage Disclosure Act data indicated discrimination had occurred on GreenPoint mortgages. GreenPoint, which was shut down by parent Capital One in August 2007, settled the charges in July for $1 million.
Statistical analyses conducted on loans originated by HCI found that black borrowers were charged around 46 percent more than similarly situated whites, which worked out to around $2,260. Hispanic borrowers saw fees that were an average of 55 percent higher, which worked out to $2,280.
“These customers were charged significantly higher fees for no reason other than being a minority — something that is explicitly against the law in New York State,” Attorney General Andrew Cuomo said in the statement.
In addition, the attorney general has filed a lawsuit in federal district court against U.S. Capital Funding LLC. A state investigation also found discriminatory practices at U.S. Capital, but the company refused to provide restitution to more than 100 minority borrowers — prompting the lawsuit by the attorney general.
U.S. Capital reportedly brokered 300 loans between January 2006 and July 2007, including around 100 mortgages for black and Hispanic borrowers. Minorities were allegedly charged 58 percent more than whites, costing them an average of $3,500 each.
“HCI Mortgage, Consumer One, and U.S. Capital Funding all did substantial business with GreenPoint,” the statement said. “The office is continuing its investigation into potential discriminatory pricing by other mortgage brokers.

Loan Audit checklist

6 Jan

tilaworksheet