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North Eastern Ohio Loan modification new options

North Eastern Ohio- The recent news about robo-signers, although embarrassing for fatty lender execs could be fantastic news for burdened homeowners.

If you haven’t noticed the nationwide avalanche of news items and blog posts and discussion about the robo-signers, then here is a synopsis of what is happening. Essentially lenders have been ignoring state regulations that govern how foreclosures have to be filed. For many states, including Ohio, a lender representative with specific authority to do so, has to sign an affidavit saying that they have personally verified the facts of the case as truth. Yet these so called robo-signers would put their notarized signature to hundreds of affidavits a day swearing to the fact that they had personally read and verified the information contained in foreclosure filings. Many of these filings would have in excess of 50 plus pages of material. In discovery many of these lender representatives have admitted to taking as little as 30 seconds to sign per foreclosure and outside of the that 30 seconds having zero knowledge regarding any specific file, even as they swore to having such knowledge.  In addition to these sworn false statements the robo-signers are often improperly notarizing (you know something is wrong when the date of the notary stamp is before the date of the signature being notarized) and often times the signatures them selfs are so completely different that it is clear they were not signed by the same person although they are the same name (also known as forgery).

Will robo-signers help you get a North Eastern Ohio loan modification?

Use of so called robo-signers by all the major lenders has exposed their weakness. For those seeking loan modifications now is an excellent time to not give up and to fight for their home!

This robo-signer issue is the literally tip of the ice berg as far as lazy lending goes. I will deal with more ramifications in future blog posts but one thing is sure,  besides the primary effect of potentially invalidating hundreds of thousands of foreclosures past and present, the ramifications are far reaching.  The biggest being that the attention robo-signers have garnered is beginning to reveal other fraudulent short cuts that lenders have taken across the board, from the beginning of the lending process to the end.  Judges, legislatures and other public figures are taking note and being vocal alongside consumer advocates.

As this story plays out we are seeing lenders halt all their foreclosures in an effort to limit their potential liability as they examine their risks and look at alternative processes and safeguards. Bank of America stopped all it’s foreclosures nationwide.  GMAC / Ally, who’s robo-signer first admitted to to such, suspended foreclosures and, get this, REO sales in 23 states. Side note- today I wanted to show a bank owned property but it came off the market.  The listing agent told me the lender had removed it from market temporarily to verify the title and make sure foreclosure on it would not be over turned.

Several national title companies have refused to insure title for homes that were foreclosed on using signatures from Robo-signers for fear that the foreclosures would be considered fraudulent at a later date and foreclosure be reversed.

There has been pressure from consumer advocates to have a nationwide foreclosure moratorium to examine these issues.  The president has chosen not to support that agenda.  However many states are now pursuing lawsuits against lender fraud as the federal government for the most part has not played a part in prosecuting lender misconduct.  Here in Ohio AG Cordray has led the way with his filings against GMAC / Ally and other servicers.  He is asking for civil penalties up to $25,000 per case of fraudulent foreclosure filing.  Even AGs in non judicial foreclosure states are stepping into the fray to make sure that lenders are foreclosing legally.

My take on all of this hoop la is the following: I think all of this is good for the consumer as for the most part lender practices have gone completely unquestioned and unchallenged.  Granted if a foreclosure is completely valid (i.e. borrower has not made payments on a mortgage loan for 90 days for reasons other than lender fraud or incompetence), lenders have right to repossess their collateral no matter how terrible the borrower situation is.  However lenders are so greedy to save money that they are not hiring the necessary manpower to process the documents for these foreclosures in a lawful and fair way.  There have been cases of people getting foreclosed on that were current with their loan.  There have been cases of people being foreclosed on that had paid off their mortgage but because the system is completely automated and there is no human checking, (illegally I might ad) they lost their home.

In my work I have seen lenders delay for months valid loan modification proposals while they moved forward with collections and then foreclosed.  I have seen the same thing with short sales.  Why?  Why would they do this when either a loan modification or a short sale would both save many thousands of dollars (collectively many billions) of loss for the investor, would keep a home owner in a home (help them exit gracefully) and would save municipalities from the vast cost of foreclosure blight?

Follow the money.  
Servicers like Bank of America and Wells Fargo don’t typically own the loans they service.  They simply collect the money for what ever company or entity owns these loans.  They are bound by an agreement to pay certain things out of pocket and are reimbursed according to the terms of that same servicing agreement.   To process a short sale or a loan modification and comply with all the guidelines for doing so takes vast man power.  It’s not easy to scale up to vast manpower.  Yet according to the testimony from these robo-signers one signer taking 30 seconds a foreclosure can sign thousands of packages a month.  With a few cut corners a home can be expedited to foreclosure sale for very little cost out of pocket to the servicer.  When the house sells the servicer gets the money advanced plus profit for it’s services paid out the proceeds.

You look at the alternative for a servicer.  Lets say a North Eastern Ohio homeowner wants a loan modification.  That homeowner will have to call the bank and take up call center time requesting a loan modification.  Personnel will spend time preliminarily evaluating if the homeowner qualifies and will prepare documents and send them to the homeowner.  The homeowner will have to put together a financial package that will likely be 30 to 60 pages of financial information.  The lender will have to wade through that info costing them more money and adding extra layers of complexity to their management as they deal with ways to have an organized work flow.  All that time ads up and becomes very costly as the servicer advances money to make this all happen.  This can become a cash flow issue depending on how the reimbursement for these costs is written in the servicing agreement.  For some servicing agreements were written before the foreclosure crisis of the last several years and there is no specific items in those agreements to allow for reimbursement of all the expenses associated with loss mitigation negotiations.

Want an Ohio Loan Modification?  There is light at the end of this tunnel!

Want an Ohio Loan Modification? There is light at the end of this tunnel!

All this to explain that as the robo-signing is hopefully stopped,  I see the possibility that servicers will have the incentive to do the right thing by being more willing to work on both short sales and loan modifications for people in foreclosure in North Eastern Ohio.  So if you have been turned down for a loan modification, don’t give up.  Reapply as there is light at the end of the tunnel.

Andy Morris is an Ohio real estate broker with an expertise in selling homes on a short sale. If your Ohio home is heading towards foreclosure or you owe more than your property is worth, please call Andy at 888-4-STOP-IT to see if you qualify for a short sale with your lender. Are you not in the North Eastern Ohio area? His team can negotiate short sales across the United States.

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