Loan Modification Success Stories

National City:

1. Negotiated a 2nd mortgage from $148,000 to $35,000
2. Wrote off a $200,000 2nd mortgage when homeowner proved that there was -0- equity

Wachovia:
Reduced the principal balance $40,000 and lowered the interest rate by 1.5%. The homeowner is self-employed and unable to prove any income.

JMO:

We are starting to see progress with the banks in their motivation to work with homeowners on modifications and short sales. If you are trying but, not having success please contact me....robin@proequitymanagement.com

REO's expected to increase an ADDITIONAL 150% IN 2009

The Center For Responsible Lending projects 2.4 million foreclosure starts in 2009, including 1 million already completed. And real estate-owned assets are on the way up again since most of the foreclosure moratoria have been lifted. States, including Michigan, Arizona, Washington, Nevada, Oregon and New York, are seeing REO activity spike, according to RealtyTrac, which reported a total of 65,017 properties in REO for May. Full Story

JMO:

We are starting to see more REO activity in both CA and AZ. In a related article we are also hearing that companies are ramping up hiring in their loss mitigation departments and upgrading technology to better equip themselves to make bulk decisions.

Geitner Urges Banks To Improve Loan Modification Process

In this letter to key banks Treasury Secty Tim Geitner is urging key banks to increase staff, appoint liaisons, streamline the process and increase the number of loan modifications.

JMO:
It' s simple. Someone in Washington finally realized that the problem is not being solved by helping everyone EXCEPT the homeowner. Nearly a trillion dollars given to banks and insurance companies and the credit crunch is still worse than ever. Gov't acquisition of Fannie/Freddie, and too many "foreclosure moratoriums" to keep count and the housing crisis is getting worse. People who can afford to pay their mortgages are making the financial decision to "walk away" .... I heard that the that the Discovery Channel is in production on an episode call "When Good Homeowners Go Bad!".

First Homeowners Now Banks Are Walking Away

I found this article on banks walking away very compelling. Apparently, banks are giving some homeowner a "head fake" on the foreclosure process and are not actually completing the foreclosure thereby leaving the homeowner with the taxes, upkeep etc even after the homeowner has vacated the property.

JMO:
Wow! where to do I start? there are so many interested aspects to this story.

1. If the bank hasn't foreclosed, why can't the homeowner take possession of the home again?
2. Is this an opportunity for tax lien investors to go in and scoop up properties?
3. Will this motivate homeowners to destroy / gut their property prior to vacating?

I think we will need legislation that requires notification of the final disposition of foreclosure procedings. I've read hundreds of "Notice of Trustee Sales" documents and I cannot find anywhere where the homeowner is notified that the bank may elect NOT to complete the process and the homeowner could remain responsible for taxes, HOA and upkeep or that the may have the right to regain possession of the property. This is going to turn into something BIG if someone doesn't close this loophole very soon.

Barney Frank May Be On To Something!

Barney Frank is recommending that we use the dividends from the financial institutions that received TARP funds to support a "TARP For Main Street" program that would provide financial assistance with mortgage payments to those that are unemployed.

JMO:

I like that Barney Frank appears to be focused on the plight of the homeowner. I can't help but wonder how much more effective this might have been if we had allocated more of the $750 Billion towards this initiative, rather than $2 Billion?

In/Out Bankruptcy In 40 Days

In what appears to be some sort of record General Motors (GM) has emerged from Bankruptcy.


JMO:
It will be interesting to see how their new "customer-centric" approach translates to satisfied customers and increased car sales. I am cautious about their comment that they are going to be able to repay $50 Billion in just over 6 years and still remain viable. I'm sure more information will surface later.

New FICO Credit Scoring System

Three NEW FICO Credit Scores Hit the Market

The Fair Isaac Company have announced that they will be releasing three new credit scores based on their new FICO 08 model.

1. The FICO Mortgage Score
The FICO Mortgage Industry Score is designed to help mortgage lenders improve credit decisions for both current and future homeowners. Introduced by FICO and Equifax, the score delivers significantly greater assessment of mortgage repayment risk — up to 25% or more for key population segments, compared to the base BEACON score. The score aids servicers in earlier identification of borrowers at risk, mitigating the incidence and high cost of foreclosure.

2. The FICO Auto Score
FICO have also introduced another industry-specific credit score for the auto industry. According to Tom Quinn, vice-president of scoring at FICO, the new scoring model "will identify 5 to 15 percent more potential delinquencies… For the overwhelming majority of consumers, the auto industry score will be relatively close to the [generalized] FICO score," says Quinn. "There is a percentage of the population that will be different. And that’s why lenders have opted to use the other [auto industry] score."

TransUnion has already made this score available immediately to lenders, while Experian and Equifax are planning to follow suit later in the summer.

3. The FICO Bankcard Score
The third scoring model is specifically for the credit card industry, officially named the FICO Bankcard Industry Option. This does the same kind of things are the Mortgage and Auto industry versions, by taking your credit file and first scoring it by the "broad-based" risk scorecard system, and then by one of two industry-specific overlay scorecards — one for files with derogatory information on any type of account, one for files without. This overlay adjusts the credit bureau scores up or down. The resulting score is scaled to match the same "good versus bad" odds as the broad-based risk scores.

These three options are generally greeted with positive comments from consumer experts. The tweaking of the current "classic" FICO score can only help lenders make more informed decisions when underwriting loans.

JMO:

As I've mentioned in past, we were due for some sort of credit reform or change to the scoring model. By separating the credit score into 3 modules there is a way to extend credit to those that may have lost or walked away from a mortgage but remained current on all other obligations. This is actually a good plan...I will keep everyone posted.