Matt Weidner – Fighting With The American People

Posts Tagged ‘modification’

This is short and sweet.  For unknown reasons, Bank of America doesn’t want to modify loans or accept short sales.  An article in today’s St.Pete times provides details on the abysmal failure of Bank of America to work with borrowers.  The full text of the article can be found here some facts to consider:

• Bank of America had a $6.3 billion profit last year;
• From 2005 to 2008, BofA issued 62,000 mortgage loans in Pinellas and Hillsborough counties;
• Last year, though, the bank recorded modifications on only about 50 home mortgages in the two counties;
• Since then, it has started foreclosing on more than 4,000 loans.

I cannot wait to find out the backroom deals, tax incentives and federal money that have been at play that keep BofA fat and happy and not working with consumers….it will come to light one day!

The following article was copied directly from the website, pissed consumer.  I have copied it directly because the information is rather complex and frankly the facts are so distressing.  The bottom line here is the documentation shows how the millionaire investors of Indymac/Onewest Bank are making obscene profits at the expense of of the common man.

FDIC Hurting Distressed Homeowners

James McCormack

Localism.com

As set forth in this FDIC publication, IndyMac Shared-Loss Agreement, the FDIC is making so called “Shared-Loss Agreements” (SLAs) with investors who are willing to purchase the assets of insolvent financial institutions. Without going into all the details, these SLAs basically offer these investors guarantees on huge percentages of any net losses that they may suffer as a result of their investment in the failed financial institution. In this particular case, the FDIC is paying for 80%+ of the net losses of the investor (OneWest Bank) who purchased the assets of IndyMac. Basically, the Net Loss is calculated by taking the current outstanding balance of the mortgage note (at the time of the loan purchase) less the net proceeds of the short sale or foreclosure offer price.

The reason this is a problem for financially distressed homeowners is that due to the loss guarantees provided by the FDIC, the investors mentioned above have very little financial risk in the deal. Therefore, they have incentives to take what would normally be a big risk (but isn’t due to their sweet loss guarantees courtesy of the FDIC) such as foreclosing on homeowners to try and squeeze out more profit even when there are feasible alternatives to foreclosure such as short sales and loan modifications. As a result, these investors are making it difficult and even impossible to get loan modifications and short sales approved.

In her blog post, Is the FDIC Killing Short Sales, Alexis McGee of Foreclosures.com states that “IndyMac was taken over by the FDIC and sold to OneWest Bank in March/2009. Guess who the investors are behind OneWest? George Soros, Michael Dell, Steve Mnuchin (former Goldman Sachs executive), and John Paulson (hedge-fund billionaire).” She goes on to describe the terms of the SLA. The highlights are below:

* The investors purchased all current residential mortgages at 70% of par value (70% of the outstanding loan amounts).

* They purchased all current HELOCS at 58% of Par Value.

* The FDIC stepped in and guaranteed that for any residential mortgages where OneWest experiences a loss, the FDIC will step in and cover anywhere from 80%-95% of the loss. The loss is calculated using the current outstanding balance of themortgage note (at the time of the loan purchase), not the amount that OneWest paid for the loan.

* For foreclosures, the FDIC picks up 80% of the tab on all of the extra costs associated with a foreclosure (BPO’s, upkeep, utilities/maintenance, legal fees, etc.)

Here is an example which shows why this creates a problem for financially distressed homeowners who would like to do a short sale, or obtain a loan modification. Let’s say one of the loans that OneWest purchases has a Current Loan Amount of $500,000. Based on the 70% purchase deal described above, OneWest would have paid $350,000 for this loan. Also, let’s assume that an all cash investor wants to purchase the property via ashort sale for net offer price to OneWest of $200,000. Below is the analysis of this situation:

* The Net Loss, according to the FDIC calculations, is $500,000 (i.e. the current outstanding balance of the mortgage note at the time of loan purchase) less $200,000 (i.e. the net proceeds of the short sale offer) = $300,000.

* Based on this $300,000 Net Loss, the FDIC pays OneWest $240,000 (i.e. 80% of the Net Loss).

* One West would then be able to sell the property in question for the short sale Net Offer Price of $200,000 and end up with total revenue of $440,000 ($240,000 + $200,000) for a loan that they paid $350,000 for. Therefore, OneWest will have made a profit of $90,000.

The reason that this situation creates a problem for a financially distressed homeowner seeking a short sale is that since the FDIC (per the information above) pays 80% of the losses of foreclosure there is no incentive for OneWest to mess around with ashort sale unless they can make much more money. That is why they are demanding absurd short sale settlements and promissory notes from the homeowner. Of course, there is absolutely no incentive to offer a loan modification so that request would be dead on arrival.

According to Alexis McGee, “The scary thing is that over 50 banks have Shared Loss Agreements in place with the FDIC. Some of them include: Bank of America (go figure), CitiMortgage, Wells Fargo, etc.” I have to agree. That is truly scary. I can already see the pain and anguish of hundreds of thousands, if not millions, of financially distressed homeowners as they are unnecessarily dragged through the foreclosure process.

The original blog post can be found at http://localism.com/blog/tn/posts/1340390/FDIC-Hurting-Distressed-Homeowners.

The entire agreement between the FDIC and One West can be found at http://www.fdic.gov/about/freedom/IndyMacSharedLossAgrmt.pdf

More resources:

http://activerain.com/blogsview/1281177/is-the-fdic-killing-short-sales-

One shocking aspect of the Great Mortgage Meltdown and the Bajillion Dollar Boondoggle Bailout was the fact that many of the parties that were directly responsible for the fraud, meltdown and collapse were paid off  IMMEDIATELY 100% of EVERYTHING THEY COULD EVER CLAIM TO BE OWED. No negotiation, no reduction in value, just good ole USA cuts a check to AIG, Goldman, Merrill, et. al. for 100% of their investment, to the tune of $62 Billion Dollars.

Today’s Wall Street Journal reports that the  massive payoffs were the result of a ploy by the French where they essentially floated a totally nonsense theory that their creditors had to receive their full investment back…and not one penny less…or risk jail.  According to the reports…..

The banks and the regulator, known as the Commission Bancaire, said bank executives could be criminally liable for accepting a discount on their contracts, according to a November report of the inspector general of the Troubled Asset Relief Program.

While true in the abstract, “their argument was very overstated,” said Pierre-Henri Conac, a University of Luxembourg law professor and a director of France’s oldest corporate-law review. “Banks give haircuts every day.”

Just so we’re clear, the French come up with some totally nonsense, the feds and their friends just buy right into it and US taxpayers cut a $62 billion dollar check….that’s nice work…

In March, 2009 the Obama administration announced a new program with the goal of slowing foreclosures and keeping more homeowner’s in their homes.   The program, called the Home Affordable Modification Program (HAMP), generally requires lenders to participate in counseling programs with borrowers and  encourages those lenders to agree to terms that will allow a homeowner to stay in their home in most cases.

The progam has wide application and all Fannie Mae and Freddie Mac approved servicers are ordered through their servicing guides and bulletins to implement HAMP with respect to “mortgage loans owned, securitized, or guaranteed by Fannie Mae or Freddie Mac (the “GSE Loans”).  Details of the program may be found at Frequently Asked Questions which provides information about the new program.

Mortgage modification activity dropped 5.1% in June, while repayment plans jumped 44.9%, according to the HOPE NOW Alliance’s most recent monthly data. In total, more than 310,000 homeowners completed workouts during the month – a 25% increase over May.

Most homeowners should qualify for a HAMP Modification.  If your lender has not offered you the opportunity to apply for a HAMP modification or if you have questions about how the program operates, visit my website at www.mattweidnerlaw.com!

On December 28, 2009 the Florida Supreme Court issued its Final Order and findings relating to residential mortgage foreclosures in Florida.  The full text of the report can be found here. The report notes that,

Florida has the third highest mortgage delinquency rate, the worst foreclosure inventory, and the most foreclosure starts in the nation.  At the close of 2009, it is estimated there will be an inventory of approximately 456,000 pending foreclosure cases statewide.

I am still digesting the information contained within the Order, but the most significant element of the Order, is that all residential mortgages in foreclosure will be referred to mediation.  This is a significantly positive development for homeowners because it will force the lender to communicate directly with the borrower.

Hidden Treasures in the Florida Supreme Court’s Mortgage Foreclosure Order

While I am just in the process of reviewing this 105 page Order to ferret out all the best parts for my clients, I am happy to report that there are several elements included in the report which are going to be very helpful for homeowners.  Look back on this blog often because I will be updating as I find new nuggets of good information for borrowers.  Keep in mind, that I will preserve most of the best bits for my clients….no sense in letting all the good secrets get out there!

Suffice it to say, this Order is great news…to find out how it can help you visit my website at

www.mattweidnerlaw.com

If you have a foreclosure case filed against you, first thing is you should have a foreclosure defense attorney.  Second thing is your attorney should be familiar with Florida Statutes, 57.011 Security by Non-Residents.  A serious problem I’ve had since the begining of the foreclosure crisis is foreign corporations or exotic non-corporate entitites like “Deutsche Bank National Trust Company” filing a foreclosure suit against one of my neighbors.  From a technical legal perspective there are only a few select entities that have the legal qualifications to appear before the court. Minor children cannot (only their parents can on their behalf), Dead people cannot (only a properly appointed personal representative can), Foreign Corporations cannot (unless and until they register and get permission from the State of Florida Division of Corporations).

Florida’s Non-Resident Cost Bond Statute

All of this brings us to Florida Statutes 57.011.  A little known and not often used nugget that has existed in Florida Laws forever, hidden like some attorney hunting treasure.  When this law was passed, the Legislature was concerned about carpet bagger, Yankee corporations filing suit against Floridians then just walking away.  The statute requires corporations to post a bond with the court ($100), to cover the costs of suit against the Floridian if the foreign corporation subsequently walks away.   Here’s another part I like…..the statute also provides that a  court….

“may hold the attorney bringing or prosecuting the action liable for said costs and if they are adjudged against plaintiff, an execution shall issue against said attorney.”

Take that Marshall Watson or David Stern or any of these other attorneys out there who are improperly taking advantage of Florida citizens.  The text of the statute can be found here, but if you want to know how to put it to work for you…contact me here at

www.mattweidnerlaw.com