Keep Home Your Own

Your home is your anchor!

Richard Rubin — Thu, 04 Mar 2010 15:47:04 -0500

“Huge sums forge their own anchor, and our future advantage, if any, will be a small fraction of our historical edge”. Graham Bowley, in his Sunday NY Times article, quotes Warren Buffett and provides his readers with keen insight into Mr Buffett’s strategies and formulas in the face of the economic hardships during the past several years. Buffett invests much like the J.P. Morgans and Vanderbilts of the early 20th century – stocking up on capital during the good times and investing when hard times bring prices down. Says Buffett, “We’ve put a lot of money to work during the chaos of the last two years. It’s been an ideal period for investors: A climate of fear is their best friend”.

Granted that few of us can draw personal parallels or easy comparisons to a gentleman with a company whose net income is in the billions and a share of his stock in the thousands. On the other hand, when it comes to dealing with collapsing family and personal incomes and mortgage loan payments, the underlying similarities give great hope when faced with a foreclosure or default on your home loan.

Homeowners’ crisis begins with banking excess
The beginning of this century saw unheralded dissatisfaction for the frustrated many who watched as real estate brought huge profits and lifestyle advantages to others who jumped into the market. Financial institutions literally opened the flood gates and developed a mortgage loan product for just about anyone who asked. We now move forward in this cycle, realizing the damages these financial decisions have passed on to homeowners. Mortgage loan arrears, defaults, over-valued homes and lost jobs are daily concerns in our law firm.

Even so, there are a number of touch points which allow for a process of recovery in so many cases. Our fundamental challenge is to avoid the foreclosure sale of your home. The front-line professionals, both lenders and borrowers attorneys, as well as housing representatives, all agree that the banks would much prefer working out a series of steps designed to defer the foreclosure sale. Homeowners should begin this process by meeting with an attorney or with one of the many organizations counseling homeowners in these situations. Loan modification discussions, court foreclosure settlement conferences and trial work-out or forbearance plans are good news solutions to the many clients who so courageously take plans of action.

What does it take to avoid foreclosure?
Lenders often times will take on these added tasks and forego an immediate foreclosure sale if homeowners can provide them with details of hardship, potential income, and prospective job offers. Gathering the paperwork and putting together the often daunting package of required materials can be laborious and frustrating. However, this work will often pay huge dividends. Many observers to this process foresee a huge increase in successful outcomes.

There are no “smoke and mirror” tricks to this process. It requires vast amounts of time, effort and patience, all of which are necessary as the numbers of submitted pleas for assistance to our mortgage lenders and servicers grow each day in unthinkable numbers.

What to do when the process server comes
While loan modifications are an option for many in early stage default, there are increasing numbers of homeowners who are served with a summons and complaint, requiring the intervention of a Judge and court action. Most experts agree that meeting with an attorney as soon as you are served with these court papers and presenting an answer and attendance in the court process also allows for loan workouts.

The laws in New York State provide a well defined extension to the hostile foreclosure sale. It is not uncommon to see these resources used in ways that encourage, through diligent and dedicated effort, a loan workout. Failure to answer the summons promptly can erase the many legal rights that homeowners have been granted and these rights can be exercised with great dignity and respect. There is no stigma attached to appearance in the foreclosure settlement conferences and the court staff and personnel are well sensitized and understanding in these parts.

The difficulty is greatly enhanced when dealing with client’s who have lost jobs and wages. From the lender’s standpoint, the homeowner may have decided that it is a lost cause and there is little hope. This is, without a doubt, the most difficult situation in which to create a pathway for positive solutions. Nevertheless, if properly managed and guided, and the rights of the homeowner are protected by caring counsel, this temporary income loss is frequently reversed. Experienced attorneys can present the new information and adapt to the lender’s review programs even at late stages of the foreclosure process.

The best first step: Having a one-on-one with your lawyer
Recognizing the new levels of tolerance towards mortgage loan defaults, neighbors and friends who have rarely if ever called upon the services of attorneys and housing professionals must now address the “what to do’s” when served with a summons and recognize that this is not an incurable problem.

I often get calls from homeowners I’ve never met who ask my opinion or want suggestions over the phone. I am totally without the benefit of knowing them, or their background. While I am sure there are cases in which opinions can be freely given after a brief conversation, more often than not, a one-on-one meeting is in order. In many cases, a slight pause and the wait until an office appointment can be convened is probably one of the best opinions I can offer.

When facing foreclosure on his home, a homeowner needs to realize that there are tips, benchmarks and strategies that can be discussed to save his home or soften the financial blow of hard times. Looking for courageous options and solutions often turns our conversation from a chaotic pulse of doom and gloom to a rallying point that, as Buffett says, is also an opportunity in this financial crisis.

Your home, your anchor
The huge housing debt taken on several years past, during a time of rising optimism and real estate fever, is not to be ignored. Our homes are our anchors and the loan problems we now face, if evaluated and addressed, are human problems and will be sorted out and solved by the people in government, banks, courts and neighborhoods. There is no confusion; there are no blind corners and there are no painful debates when you are faced with the possible loss of your home, commercial property or investment parcel. The property is your anchor, and if secured properly, will permit you to hold fast and face the storm of uncertainties until you can implement an effective strategy for paused consideration, unique alternatives and loan workout solutions.

Is there life after foreclosure service??

Richard Rubin — Tue, 16 Feb 2010 12:09:58 -0500

Thousands of our friends and neighbors have gone to the front door at dawn to pick up the morning paper, only to be greeted by a process server handing them a foreclosure notice. These people have been compromised by the ongoing failure of our federal and state governments. How? These government entities have failed to partner up with financial institutions and resolve our national housing instability. Without this resolution, every well written summons and every complaint seeking the foreclosure of a mortgage loan will result in a forced, judicial sale of the house. So is there life after being served notice? There can be.

A mortgage plainly states that if you do not pay the monthly payment, keep the house insured and free of violations and a number of other conditions, you will be sued in State or Federal Court and eventually your house will be sold at a foreclosure sale. A homeowner will listen to this at the closing table while signing a thick stack of documents and concentrate on anything but these potential chaotic results.

How federal and state government has failed foreclosed homeowners
There is little doubt that the overwhelming number of mortgage loan defaults do not result in sustainable loan modifications. Over one year ago, a group of 15 Attorneys General, including our New York State Banking Superintendent, joined in a letter dated February 2, 2009 to the Comptroller of the Currency and the Director of Office of Thrift Supervision stating that "the majority of loan modifications in the past year have not led to meaningful payment relief to homeowners. We are concerned that either the institutions supervised by the OCC and OTS have thus far failed to offer homeowners sustainable loan modifications, in contravention to guidance issued by the federal banking agencies...."

Almost one year later, this State Foreclosure Prevention Working Group issued its Data Report No.4, January 2010, and published its findings that the number of homeowners in default continues to grow; loss mitigation efforts are backlogged; principal reductions are rare; and that our lenders and servicers have "not succeeded in turning the corner to reduce the high levels of foreclosure." Newsday, February 11. 2010, Ellen Yan details these striking considerations in her article that the "number of newly started foreclosure cases on Long Island went up last month." Notwithstanding, she writes of some positive trends that are now forthcoming and reports of a successful loan modification for a Nassau county homeowner, even after the lender started a foreclosure proceeding.

Ms Yan described this process in her earlier article that "state law will require settlement conferences for all borrowers in the foreclosure process". She reported that court officials are "hoping to keep these people, more of them, in their homes." Many people who have come face to face with the process server feel no need to reach out for guidance, counsel and assistance. Each foreclosure summons is required to provide phone numbers for counseling agencies and each court house provides a Clerk's Office for homeowners to enter and seek information.

Strategies for life after foreclosure service
Let me provide you with a few positive and success oriented strategies and posture that there is life after service of the foreclosure action. Our law firm has a significant focus on "life after service" and we regularly meet with homeowners who have been served with a foreclosure summons and need counsel and defense to the possible loss of their home. A meeting in our office often gives the security that they seek and enables the confidence that there is a process for solution. The guarantee is that if "you do nothing you will get nothing" so work with an attorney that will help you understand and search out for answers to avoid foreclosure.

The wonderful thing about meeting with us is that the potential to succeed is limitless. I realize that when you greet that process server who explains that he is only doing his job, you most certainly will feel the weight of the world crashing down. You must take action. Look to mentors, neighbors and professionals who have had experience in this area. The statistics are overwhelming--- one out of seven borrowers are behind on their mortgage, according to the Mortgage Bankers Association 3rd Quarter 2009 survey. This absolutely means that you are not alone.

But it also means that someone won't magically appear in your living room to describe what actions you need to consider. To succeed, it means that you must begin the process of rebuilding your financial confidence and recognize, once you begin to search for the solution, that you will be assured of meeting someone who has had a similar problem but has done something to motivate and initiate a process that will defend the foreclosure action, slow it down to the point of engaging your lender in Court at a foreclosure settlement hearing, submitting for a loan modification or if necessary, take all other appropriate actions in the legal process to protect against a foreclosure sale.

The past three years have seen enormous actions from our financial institutions to engage this revolutionary concept of modification rather than foreclosure. There are steps now in process to implement a Treasury Department plan to modify eligible borrowers who have a second mortgage lien. These concepts are bold and innovative and require much on the part of the lender, but also on the part of the homeowner. Remember, that there is life after service and you can head in the direction of a solution.

Why should the foreclosure madness continue?

Richard Rubin — Mon, 25 Jan 2010 17:41:01 -0500

Would you believe that recently, a record number of homeowners and lending institutions have partnered in the largest and most heralded effort in the history of this great country to save homes from foreclosure sales? I didn’t think you would. I wouldn’t believe it either.

Few, if any, who face the issues of mortgage default would find such a statement to hold water. In fact, most people who have entered this arena bear witness to a process that finds them discussing their woes with bank representatives in foreign countries, or with loss mitigation center counselors who have no e mail addresses, no last names and no phone numbers that reach them at their desks.

Clearly, the loan modification process and accountability measures now in place are less credible than the rancher who says he can herd cats into a barn. In search of a solution, we read that our Federal government has enabled its Treasury Department for the past 9 months to develop enormous crates of rules and regulations known as the HAMP program. National lending institutions and mortgage servicers have signed up to comply with these concepts.

So, why are we still suffering this madness? Where are the solutions HAMP promises and why are they not being followed? Few people are equipped to take the temperature of these topics and provide us with real-time answers. Richard Thaler has given his readers this past Sunday in his Economic View column in the NY Times a very distinctive point of view. He similarly concludes that "Lenders have been reluctant to renegotiate mortgages, and government programs to stimulate renegotiation have not gained much traction."

Thaler suggests a vastly different approach which hardly requires reams of regulations to implement. "The bank would be required to reduce the mortgage by the average price reductions of homes in the neighborhood. In return, it would get 50 percent of the average gain in neighborhood prices-if there is one-when the house is eventually sold".

Sounds simple, but is it too simple to work?? This supports all economic theories that foreclosures are just bad business for our neighborhoods and create instability and chaos in every facet of our lives. Of course, we will hear the cries that the hunted have outfoxed the hunter; that the borrowers and homeowners who have defaulted in their loan obligations are being given a free pass for their failures.

We will just have to cope with such criticism and shoulder these moral dilemmas for our neighbors and friends. Moreover, we must continue to hold forth hope and solutions to the millions of Americans who are now facing such problems, as well as to our national lending institutions who are our partners in recovery. We must allow our local courts to enable the present legislation to hammer out foreclosure settlements and we must educate our friends and clients that there are real and definite paths to follow after receipt of the foreclosure summons and visit from the process servers.

We must be aggressive in our outreach to those in need of creating new ideas and developing new approaches to handle a foreclosure, and we must begin to imagine that homeownership can be restored. Credit scores will once again become a vital and sought after statistic and people will willingly and with great hope, visit such sites as CreditKarma.com or Quizzle.com and other credit sites as a source of pride.

The thought of saving homes and neighborhoods is a reality for many who visit our offices. Why do some choose to enter our doors and opt out of the herd of madness? Rather than spend any time on that question, let us hope that many more will choose to do so and restore confidence so that banks can do what they do best. Let us hope we can once again and in good faith and conscience ask our lenders to restore our neighborhoods with loans, jobs and homes.

Stronger foreclosure laws may offer hope for the year ahead.

Richard Rubin — Mon, 25 Jan 2010 16:50:28 -0500

The past several days have shown repeated sightings of pending Board approvals for chiefs at some of our major lending and banking institutions. One such article stated that James Gorman, the chief executive at Morgan Stanley is in line for an $8.11 million dollar deferred stock bonus for his work and efforts in 2009. Bonuses, it seems, are being taken for granted. It is merely a question of how much.

I would like take this moment to reflect upon the enormous devotion of time and analyses that must have been spent in order to present this bonus package to the Board for approval. And maybe the time spent in such reflection allows a bit of a respite for us all, as my days are not ordinarily spent pondering such concerns.

For most of us, the realities of the current economic crisis are quite a bit less pleasant than Mr. Gorman’s. Yesterday I met with a very humble client, a person who could so easily live right next door to any of us, a client who is responsible to her family and children and also responsible to a very large and respected corporation to show up for work every day, at exceptionally inglorious hours.

My client initially visited me the day before our country celebrated Independence Day, in the midst of an incredible summer rainstorm. My impression was that she had a most serious issue to deal with. She most certainly must have been motivated to make such a drive, especially the night before a holiday weekend. She shared with me a notice she received earlier that week, stating, quite simply, that her house was going to be auctioned to the highest bidder in several weeks. Her family had become an "endangered species".

Our conversation explored the history of her ownership, and several interim departures and returns to the residence. But her family's commitment to stay in their house remained the consistent thread of our conversation. We discussed short sales, refinancing, loan modification, considering all the possible solutions. Unfortunately, time was not on their side. Now, some seven months later, the signs of her loss are once again apparent. Cold trails of short sale contracts, mortgage loan applications, credit reports, mortgage consultants and court appearances may have held her hopes hostage for the last time.

New clients also call with similar and dangerous experiences with process servers, foreclosure consultants and loan modification experts. The reactions of these clients are quite typical. Disbelief, anger and frustration head the list of emotions surrounding homeownership problems. Each family that enters our doors has had their dreams of backyard barbecues, gatherings and holidays evaporate before their eyes. None expected it when they bought their homes. I have yet to meet the borrower who entered the closing room planning foreclosure several years hence.

This New Year provides the opportunity for relief. Our state legislature has enacted stronger laws for our courts and judges which may hold off the foreclosure process and provide means of settlement and modification. Changes can be immediate for those who find a foreclosure summons in their mail. We know today that there are routes to travel and that the only shame is to do nothing.

Monday morning I will be starting my day with a client who received a trial loan modification offer in the mail, after submitting reams of documents, pay stubs and bank statements over the past 5 months. His unhappiness was capped by the suffering of his family and friends in Haiti. Nevertheless, he will make his way to my office and when he leaves, more than likely, he will have one less problem on his plate, at least for the next several months.

No one knows why he received a loan modification, although we can speculate on such success. For that matter, no one knows why the file next to his has been denied or not yet acted upon. What we can definitely state is that there are sufficient and recognized methods that can be utilized to defer and perhaps overcome the foreclosure process. It requires commitment on the part of the homeowner and a desire to change; a need to keep an open mind on the potential outcome; and a deep seated belief that reinstatement may be an achievable goal.

True, I do not plan for million dollar bonus proposals and the lobster dinners this year were few and far between, but this is a time for resolutions and challenges to the silent majority of homeowners facing chaos and losing a little more sleep each night. These are not illusions and the nervous worries are reality striking hard.

These very same insecurities can become assets if turned into action. Going to visit an attorney, bar association or foreclosure counseling center is no big deal. This may seem obvious, but for so many, paralysis is the natural reaction. If there is one thing that I can guarantee, it is that amazing results can happen with the synergy of programs and legislation now in place.

Still feeling the stress of the mortgage meltdown?

Vanessa Saunders — Wed, 13 Jan 2010 10:56:21 -0500

NBC's Today show's Ann Curry discusses the mortgage melt-down with Barbara Corcoran, & Financial Editor Jean Chatzky. They offer advice for homeowners still experiencing difficulties

Visit msnbc.com for breaking news, world news, and news about the economy

If Morgan Stanley isn't immoral, neither are you.

Richard Rubin — Mon, 11 Jan 2010 20:47:01 -0500

With families, friends, neighbors and business colleagues enduring painful decisions on who to pay and how much to pay, our challenged budgets now look at one of the most time honored American debts as another minefield to cross. It is reported that despite the rising stock market indexes, the economic recovery is steeped in rising unemployment on a monthly basis. Some statistics now report that nationwide we may be looking at a 10% unemployment rate. Washington experts, the same faces, people and opinions who so openly rallied around the Obama plan of home loan modifications, must now face squarely the singular dismissal of any notion that we are witnessing success on that front.

Roger Lowenstein's article in this Sunday's NY Times Magazine section, entitled "Just Walk Away" clearly and vividly engages the morality issues which plague our neighbors who may have to consider such situations. Says Lowenstein, "Such voluntary defaults are a new phenomenon. Time was, Americans would do anything to pay their mortgage-forego a new car or a vacation, even put a younger family member to work. But the housing collapse left 10.7 million families owing more than their homes are worth. So some of them are making a calculated decision to hang onto their money and let their homes go. Is this irresponsible?"

Mr. Lowenstein brilliantly places the default decision under a microscope and continues to soothe his readers who experience these crippling bottoms in his comparison to our business leaders who have made such choices without hesitation. "Morgan Stanley recently decided to stop making payments of five San Francisco office buildings.” Says Lowenstein. “Nobody has said Morgan Stanley is immoral.”

But our biggest financial houses and national institutions may not be entitled to this same "pass" that family and friends may so rightfully deserve under the loan modification and Treasury Department guidelines. Federal and State mandates, regulations and guidelines have been enacted to govern the conduct of mortgage lenders and servicers when faced with a defaulted principal residence homeowner. It is obvious from the many cases which I have participated in, and the hundreds, if not thousands, of phone calls and conversations in our office, this default was not planned.

Nobody talks about their planning their default, and how things worked out just as they anticipated. No one has come in and said that several years ago they decided to "speculate" on a home which they knew was overvalued at the time and then pay for a few years with the strategy to watch their equity and hopes evaporate.

On the contrary. The story is quite similar, time after time, that our clients, customers and friends in fact did not speculate on their homes, but rather, bought at a time when the economy was in strong, upward growth and their businesses were solid and their income was wonderful. These are the stories I see. For the people I come into contact with, their intention was never to walk away from their homes.

Subject: "I love you...................I just don't want to know you anymore"

Richard Rubin — Mon, 04 Jan 2010 08:21:53 -0500

Some light reading to pass along this month comes from the Treasury Department ¹. The Executive Summary of the report clarifies what some may assume to be common knowledge, but for the rest of us, let me quote: “Overall, mortgage performance continued to decline as a result of continuing adverse economic conditions including rising unemployment and loss in home values……Seriously delinquent mortgages – rose………….Foreclosures in process increased……….delinquencies continued to climb. The percentage of prime mortgages…was….up more than double the percentage of a year ago.”.

Take a look at this report on line and view the graphs, well written summaries, mathematical analyzes, tables and indexes and let’s see if we can leave the report on our coffee table as a new item to show our neighbors and customers.

However, others really don’t think this is necessary. Martin Andelman writes in The Niche Report, December 2009 a most telling and courageous article and discussion on the Treasury’s Assistant Secretary for Financial Institutions, Mr. Michael S. Barr. It reports (again) that “fewer than 2,000 of the 500,000 trial loan modifications in the works had become permanent under Barr’s “Making Homes Affordable” program, according to a congressional oversight panel.”

Mr. Andelman then says in his closing remarks (which are so on point) to Mr Barr: ”Step down, Mr. Barr. Your services are no longer required. And you can leave today, as far as I’m concerned. No need to wait until your replacement is found, because having no one in your position, as compared with having (you) in the seat……….there’s no chance you’ll be missed, and leave it at that”.

Sounds a bit harsh and I have even toned down the choice of his words in my quote of his article, but take this to heart- when it hits you, or your family, or your neighbors, or your friends answer the door at 7am to meet a stranger who hands you a foreclosure summons, well then, maybe Mr. Andelman hit it right on the head.

And then what do you do? What are you supposed to do? Who do you share this news with and how soon do you have to do something about it? These are the families and clients that I see and talk with. This is an unheard of fix to be in. No one walks away from their home. Our neighborhoods are filled with children, seniors, friends and people from all walks of life who are in love with their homes, backyards, garages and basements.

But, after an early morning surprise visit from a process server with a foreclosure summons, all of a sudden and in that split second as you walk back into your front door and look around at the familiar settings, many love affairs end. Short, sweet and to the point. Those are the bullet points of discussion, amidst the tissues and tears. The personal stories, the special rooms, the antique heirlooms, all seem to lose their significance as clients and families begin to face the harsh reality of foreclosure.

No longer are the conversations around the dinner table about home equity, college payments for the children or retirement dreams. Now we face more pressing issues of forensic loan audits, defenses to your promises to pay these obligations and the moral dilemmas of credit reports, job losses and “Will my neighbors find out I’m in foreclosure?” Our lenders have not created this chaos nor are they blind to the loan modification procedure. In varying degrees, our mortgage servicers and lending institutions are participating in loan modifications with different degrees of success.

With continued urging and oversight, the loan modification principles and regulations can benefit those who struggle through the process. It requires patience, phone calls, more patience and more phone calls. Many families visit their attorneys and receive counsel and guidance in these procedures.

The economic crisis we face does not get solved by walking away from our homes. There are long term issues that may affect a homeowner, even after a court ordered sale of the home, in terms of deficiency judgments and other related debt issues. When faced with a foreclosure action or as you see the arrears begin to increase, it does not have to be a case of “falling out of love” with your home, your lender and your debts. Homeowners have options and there are roads to recovery that can be evaluated, when discussed in face to face talks with attorneys who are interested in these areas.

1. Office of Thrift Supervision, US Department of the Treasury, Comptroller of the Currency, Administrator of National Banks, in the OCC and OTS Mortgage Metrics Report, Disclosure of National Bank and Federal Thrift Mortgage Loan Data, Third Quarter 2009, December 2009

Beyond the Math: More Hardships, Rubbernecking & Kleenex Ahead

Richard Rubin — Mon, 21 Dec 2009 18:07:29 -0500

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The statistics are reported everywhere we turn - 3.3 million loans which may qualify for loan modification have actually resulted in an incredibly meager number of modifications, helping only some 31,000 families. You do the math on that one, and don't spend too long looking for a calculator that can handle 15 digits. Off the top of my head, it sounds like the White House HAMP program to date has failed miserably for the millions of families who qualify but remain underwater.

Under the Obama plan, borrowers who meet the standards, rules and regulations enacted by the United States Treasury Department in 2009 should be able to modify the loans which they refinanced and purchased in 2005 and thereafter, during the "boom times." You can do the math on that one too, but I would say that considering the declining property values, destroyed credit ratings and uncontrolled unemployment, the Obama process just doesn't seem like it is working.

Richard Wilner, in last Sunday’s NY Post's article "Options to Keep Home Yours" announced that a new, untouched, unexplored and unreported crisis is the multi-billions of dollars that banks are carrying on their books for second mortgages. "Bank of America is exposed to $154.2 billion dollars; Wells Fargo is exposed to $127billion; JP Morgan Chase $124.8 billion; Citigroup $59 billion.” If banks do give the mortgage a serious rate cut to keep a family in place, then the value of the second lien on the home - which the banks carry on their books- could be wiped out. And that could be enough to make several banks insolvent. Perhaps that is why B.Of A. has concluded just 98 permanent modifications. The same is true of every major bank." Do the math on that one and I don't even have to comment.

It gets even better. Open the financial pages, go do your shopping on the internet and call your mortgage brokers. You’ll hear that mortgage rates in the United States have dropped to their lowest rates in the past 70 years. It’s just another well intentioned plan with fantastic mathematical possibilities down the drain. Borrow at lowest ever levels, yet deny access to these historically low interest rates. Like the old, yet trusted expression, it’s like giving away ice in the winter.

For any of those of you who have looked into the possibilities of re-financing or purchasing, you have personally witnessed some of the most expansive and intrusive questioning into your personal and professional lives. Refinancing could save you hundreds and thousands of dollars but yet this traditional source of credit is scarce and difficult to find, even for the very best and elite, much less the first time homebuyers or middle class families.

Taking this another step, Mr. Wilner extends a well pointed finger.."In an ironic twist, the only thing worse than HAMP's failure would have been the absolute success of HAMP. Can you image saddling the banks with 2 percent 40 year mortgages should there be inflation? If you think the banks are bad at lending money now, they would never lend money under those circumstance."

The rumor mill is working overtime. Neighbors are sitting at their kitchen tables and wondering if the little signs of disrepair in their neighborhoods are signs of foreclosure and arrears. When our friends are unemployed and tales are told in our elementary schools and upper grades of their moms and dads unemployment, it's a sign of the times. The super growth of mortgage arrears have created huge rubbernecks and tie ups for our major lenders to handle, even during their unprecedented struggles to remain viable and productive.

Go past the math and statistical reports. Look around and witness the unparalleled demise of the American home ownership program as we know it. My advice for Realtors, bankers, buyers, sellers, landlords and tenants, or anyone with a keen interest in the economy and a sharply honed desire to strike it rich is-----buy Kleenex. Simply stated, until we get the math working and producing loan modifications, we will all see a steadily growing demand for tissues to wipe away the tears.

As a post closing note to those of you following Judge Spinner's "Horoski Dismissal Case,” Carl MacGowan in Saturday's Long Island Newsday, reports that OneWest, the parent company of IndyMac Mortgage Services, admitted that it erred in sending the family a demand letter even after the judge dismissed the case." This case will be followed closely as it winds it way thru post judgment and appellate practice. Keep this one right on your radar screen because it may prove to be our modern day version of David v. Goliath.

For loan modification legislation, less is more.

Richard Rubin — Tue, 15 Dec 2009 17:51:11 -0500

This past week witnessed the testimony of Douglas W. Roeder, Senior Deputy Comptroller for Large Bank Supervision, Office of the Comptroller of the Currency, before the Committee on Financial Services, before the United States House of Representatives. (Just try to imagine all that went on before this testimony happened; what went on during the testimony and what will go on in the future.) Without placing this thought into one of our pending time management departments, we’ll try to keep our summary of the Senior Deputy as simple as possible.

The Federal government, and now with increased legislation, state governments as well, have decided that banks and servicers have insufficient personnel to handle the number of pending mortgage modification submissions, regardless of whether the present program guidelines are met by the homeowners. To that end, our Washington representatives, whether elected or somehow federally employed, have created an untold number of departments, sub-departments, secretaries, senior deputy positions and perhaps even some clerks, to follow the much heralded foreclosure and delinquent mortgage problems in just about every State in our nation.

It’s about time. Homeowners' equity has evaporated; credit scores are at their lowest ever; banks will not provide refinancing to "at risk" customers and our homeowners who have applied for modification receive temporary solutions that solve nothing. Unemployment puts this whole process on the verge of total collapse, yet the Department of Treasury has mandated banks and servicers to modify. We have added regulations, laws, testimonials, mortgage metric data and now new accountability standards.

Bob Tedeschi, in a recent Sunday NY Times article December 11th, "Short Sales, Long Process", adds still another rung to this ladder leading nowhere. "Homeowners can continue to expect a painfully slow process that sometimes fails, and can ultimately lead them back to foreclosure". Adding this short sale practice into the mix of loss mitigation efforts, he states " further strains the bank's ability to handle them in a timely manner".

Overall, it seems quite clear that all indicators point to rapidly increasing homeowner defaults, bank and servicer personnel challenged to account for their responsibilities and rising homeowner complaints with no effective way to curtail these failures. The directives, laws, court opinions and public outrage have all been heard over the past two years seeking to manage homeowner assistance. But none have resulted in even the slightest meaningful success ratios.

Consideration of these failures may lead some to the inescapable solution that without mandated "teeth in the process" we will continue to report on foreclosure statistics, boarded-ups homes and devastated neighborhoods of shame. Perhaps we have had enough thought given to rules, regulations and hearings and we should return to the old fashioned way of doing business and getting business done. We need our federal government to send a meaningful economic directive to our servicers and lenders to pay the piper for failure. Denials of modifications where they should be granted must become an actionable basis to avoid foreclosure. With all due respect to our Senior Deputies and Chairmen and Senators, enough is enough.

Return to our local courts and governing bodies as Justice Spinner has done and bring the parties to Court, one by one, when the existing laws have not been followed. Spinner’s much discussed opinion of canceling a mortgage in Suffolk County has now resulted in his Order to the parties to return to Court and explain why the bank took further action despite his ruling.

Sometimes less is more. We do not need additional laws to restore home ownership goals. We have the tools we need, and there are those who will see that we can all add to the core qualities of our lives without more.

"Desperately Seeking Solution's: Patching Up the Marriage Between Lender and Borrower via Loan Modification Still Needs Work.

Richard Rubin — Mon, 07 Dec 2009 14:03:47 -0500

This past week, the Obama Administration reported new efforts to spearhead a national drive to help borrowers in arrears to modify their mortgages. In fact, the new Chief of the U.S. Department of Treasury’s Homeownership Preservation Office, Phyllis Caldwell, was quoted “We are encouraged by the pace at which trial modifications are now being made to provide immediate savings to struggling homeowner’s and will lead the campaign to convert the trial modifications to permanent ones. This Treasury Announcement contains continued representations of the government’s Herculean efforts to serve the nation and ensure that all who come forward can use these trusted resources. But is it really a case of “seek and ye shall find??”

Let’s run through some of the articles which we’ve been cutting out and saving in our desk drawers over the past year. Local Newsday articles, going as far back as February of this year, quoted housing experts, presidents of real estate associations, community leaders, and even Pres. Obama, all expressing confidence in these policies, announcing opportunities galore to save our homes from foreclosure. The U.S.Treasury “doubling its $200 billion capital commitment to Fannie Mae and Freddie Mac” directed to keep our homeowners in their homes. Fast forward, 10 months later to the Sunday NY Times article by Gretchen Morgenson. “After months of playing pretend, the Treasury Department conceded last week that the Home Affordable Modification Program, its plan to aid troubled homeowners by changing the terms of their mortgages, was a dud”.

So what happened? Where did the $75billion dollars go? Where did the $200 billion dollars go? Was it ever there, or did our neighbors, colleagues and friends, all who are desperately in need of help, just decide to forget about it? Did our citizens forget about the chaos in their families, marriages, businesses and jobs and bury their heads in the sand as their homes and communities fell into foreclosure?

Ms. Morgenson provides fascinating statistics and the dire consequences of this enormous Federal failure to secure modifications and solve the problem. It doesn’t even stop there. As Ms. Morgenson pointed out, “You (also) have to address the second liens.” Many experts agree that this expanded and troubling issue has not yet entered the national discussion.

Imagine if these positive “Plan B’s” were focused upon by our national leaders who are committed to nothing less than success. The monetary penalties and sanctions against the servicers are included as a part of the recent Treasury accountability bullet points. Those active and concerned in the modification field rarely hear from the borrowers a demand for such action. They don’t seek punishment, embarrassment or penalties against their lenders and servicers. They are desperately seeking solutions to what they perceive to be a “till death do us part” mortgage vow at their closings. Our neighbors do not want foreclosures and board-ups and forced short sales. They are seeking that “Plan B” as called for by Ms. Morgenson. The federal dollars have been committed; that’s what we are told. Unfortunately, it is not getting done and is failing despite submissions for loan modifications. Maybe it takes the Court decisions of voiding mortgages or other sanctions to “solutionize” the process for loan modifications. This ultimate “divorce” is not what I see and hear. I see and hear the concerns for settlement and modification, for counseling rather than divorce, and in essence, for these families and neighbors to return to their closing vows.

How Long Does A Loan Modification Take?

Vanessa Saunders — Wed, 02 Dec 2009 11:09:05 -0500

How long does it take to get a loan modification? Of course, the answer is that there is no sure-fire answer.

Loan modifications rely on several factors; responsiveness and policies of the lender, the effectiveness of the mitigation company, preferably a well versed attorney, and of course, the commitment of the homeowner. There are many parts that sometimes come together for a quick solution (less than 60 days), but usually take much longer. Let’s look at the issues that effect how long a loan modification can take.

The Mitigation Company

Lenders are strict and have rigorous requirements, an effective mitigator is important to moving the process along quickly.

In the beginning, there is a lot of preparation work that includes compiling financial information and other pertinent information to your case. An effective law practice will have a proven process and will ensure that you are providing the necessary information in a timely manner.

Once your file is at the lender, your attorney will ensure that the inevitable requests for updated documentation are relayed to you and processed quickly. Valuable time is often lost if responses are not met immediately

Responsiveness and Policies of the Lender

This is by far the most variable and important issue to the modification duration. It is usual to take around 4 months, but can be highly variable. In some cases the process may take six months or even a year depending on the complexity and commitment of all the parties.

Some lenders are committed to the modification process and are organized in such a way that they can move quickly. However, it’s more common to see lenders taking their time and dragging out the process.

If you attempt to do a loan modification on your own, expect to get the run-around. Lenders are often looking for reasons to deny a loan modification. You probably won’t find them too responsive to your requests for immediacy. In many cases, they are understaffed, but often, their policy dictates a long, drawn out process.

Commitment of the Homeowner

If you do decide to use an attorney your commitment is vital to the process. There are established methods of doing things and the process can move quickly, but without your cooperation, it does not work. If a homeowner does not comply with documentation update requests, it kills the process and can result in setbacks in the case. Always respond quickly to any requests whether they are from an attorney you hire or the lender itself.

Judge sends harsh message to banks and bureaucrats

Richard Rubin — Tue, 01 Dec 2009 11:07:46 -0500

A New York judge’s ruling to deny mortgage foreclosure sends a message to banks and bureaucrats. In a recent blog Felix Salmon of Reuters outlines the judgment Indymac v Yano-Hiroski making Judge Jeffrey Spinner of Suffolk county The Hero of the Day.

“If wishes were horses, beggars would ride.” Harsh sentiments indeed, but that statement describes nicely how federally mandated orders for banks to modify loans and reduce foreclosures have been ignored. Recent headlines screamed to readers that the United States Treasury Department's Assistant Secretary for Financial Institutions has now concluded, "The banks are not doing a good enough job" and that “some of the firms ought to be embarrassed, and they will be."

The statistics and reporting data bear out the good secretary’s accusations. Out of 500,000 loan modifications, less than 2000 have secured "permanent" status under the Obama Administration loan modification policies and regulations. Based on those odds of success, about one in 250, many people would see a greater chance of success in Atlantic City or Vegas.

But why should we be so pessimistic? After all, White House dignitaries, Secretary's of our Federal Government and chief financial officers and economists are all in agreement that these results are not acceptable. Now that we have this consensus and agreement, where is the written order to modify and stop foreclosure? Look no further than your own backyard.

New York Judge Jeffrey Spinner's decision in the Suffolk County Supreme Court on November 19, 2009, reciting standards reported more than 100 years ago, denied access to foreclose to a lender. This ruling is not a 3 month trial plan; not a trail of unanswered phone calls nor nameless lender representatives taking our calls. This ruling says, without question, “Come into our court with knowledge of the families and clients you have permitted to borrow money against their homes and in each and every case, you must work in "good conscience and justice." Can you imagine if only our elected officials in the highest offices throughout our land read this decision. Maybe this wish will be granted and we should all learn to ride.

Banks now forced to cooperate with loan modifications by lawyers, legislators and courts.

Richard Rubin — Mon, 30 Nov 2009 11:43:49 -0500

News stories about the economy have indicated recently that the worst recession since the Great Depression of ’29 is getting better. I can say in a word that for millions of homeowners in America who face foreclosure, (and yes, there are many more on the verge) it’s far from over. And banks continue to deny qualified borrowers the relief granted by President Obama.
The United States Congress has in place legislation requiring banks to grant loan modification if borrowers meet certain requirements. But banks don’t want to cooperate. One reason is they obviously don’t want to lose money on their loan assets. Another reason is that lenders rack up huge fees on the accounts of homeowners in foreclosure, fees that make it more profitable to delay than foreclose. So they drag their feet. In an article published by the New York Times Nov 28th, Peter Goodman states that the government will push lenders to reduce more loan payments. However, even when borrowers can get banks to consider their modification, the lenders are uncooperative. Federal law requires mandatory conferences in court regarding subprime mortgages before a foreclosure sale can be scheduled. (A new law is on the horizon extending this protection to prime mortgage homeowners as well, by the way). In an article published by Bob Tedeshi Nov 27th in the New York Times "Foreclosure Protection For All" he writes about the nearly 20 measures in the legislation. Mediation could provide the most relief for struggling borrowers, and it will require mandatory attendance in court by lenders' representatives, who are instructed to “come and be prepared.”
Unfortunately today, many of these conferences are worthless to the homeowners, who enter court with a hope that their loan modification submissions may actually be heard. The reason is that the law requires no accountability of the banks. When a lender's representative arrives in court with no information, or who shows no interest in making loan modification efforts, there is little recourse.
But finally, some borrowers are doing something about it. These few have spoken up, writing to their state and federal government saying, “If you believe in ‘no more foreclosures’, then do something about it, and do it now!”
Remarkably, government listened. And not only have our Albany officials heard our pleas, but our judges and class action lawyers are also in the fight. We are following a class action complaint where several homeowners are suing their mortgage servicer and several Government officials. This lawsuit seeks judicial development of remedies because these families have been denied loan modifications even though they meet the eligibility provisions of the Obama plans. It is claimed that over 500,000 loans are similar in nature and representative of inadequate attention to loan modification laws.
It gets even better! (Sit down for this next highlight,...please.) A Suffolk County Supreme Court ruling recently canceled a mortgage originated with IndyMac, now OneWest Bank, for reasons including the lender's continuing failure and refusal to cooperate and that it did not consider any loan modification proposals. If you are an IndyMac borrower, take a deep breath because this has to get their attention.
Our houses and neighborhoods can be saved by appropriate and well considered lawsuits and many of our judges are listening and ruling that the foreclosures must be addressed. Loan modification laws are on the books right now and can be effectively used to solve a foreclosure action. These laws and court rulings are tools that will be raised in defending a foreclosure action and actively engaged in our legislatures and courthouses.
Throughout these past several years we have witnessed the foreclosure actions pouncing on our neighbors and friends. People are on the edge of default, using credit cards to pay debt and supplement income, are struggling to save their homes and families through loan modifications. Finally, more attention is now being given to strengthening our laws and the courts are listening.

Do you owe more than you are worth?

Richard Rubin — Fri, 20 Nov 2009 13:41:12 -0500

We didn’t expect to be in this economic fix. We followed the lessons taught in our school. We took the advice of our parents. We followed the suggestions of our bankers and mortgage lenders. Our life patterns and ever increasing responsibilities allowed us to embrace the core values that we believed would make us succeed. But as the expression goes, "look at the mess we’ve gotten ourselves into now".
Trillions of dollars have been lost in home market values. Millions of families owe more on their homes than they are worth. Thousands of foreclosures actions have been filed. And the most telling statistic of all: each classroom in every school in America may hold at least one student whose family will lose their home.
As the number of new clients seeking help from attorneys grows, we see the ravaging effects of economic chaos: sleepless nights, family break downs, business closings, lost jobs and savings. Simply stated, many of our neighbors no longer have the ability to pay their bills and are losing their homes. Should so many of our citizens have known better? Can so many people be wrong at the same time?
Without hesitation, loan modification and defending against foreclosure actions must be identified by our homeowners, lenders and elected officials as alternatives to a foreclosure sale. We see some signs of our economy "bottoming out" or even on a path to recovery. The reduction of debt and monthly payments loan modification brings allows families the ability to pay and remain in their house. The lender's asset remains protected and intact. Our neighborhoods and localities are preserved and continue to benefit from the avoidance of a foreclosure sale.
The courts provide special parts and rules for settlement conferences in foreclosure actions. When a summons and complaint is served, mortgage holders should not throw up their hands in surrender as if all is lost. There are counseling agencies available, and attorneys who will provide guidance to help save their client’s home.
Clearly, it’s not a case of "we should have known better.” We purchased our homes and refinanced to better our lives. Now we face these challenging financial times and we do know better. We know there are solutions with loan modifications and defending the foreclosure action.
These solutions do not happen automatically but require borrowers to work towards these goals. If you are in foreclosure or in financial distress that may lead to foreclosure action, find an attorney to help you work through your situation, preferably sooner rather than later. You can find alternatives to your dilemma, and when you do, you’ll sleep a lot better.

Loan Modification Scam Alert: Forewarned is Forearmed

Vanessa Saunders — Thu, 12 Nov 2009 14:29:35 -0500

Many of my friends and family have expressed their concern about getting good advice regarding loan modifications.

The word is out that there are many scams (PDF) targeting financially distressed homeowners. Some are ending up not only loosing their homes due to foreclosure, they are also loosing the precious few dollars they have left, by trying to save themselves.

This video clip from a recent ABC newscast will help you understand the correct steps to take to avoid the same thing from happening to you.

It is imperative that if you are in financial distress that you contact an attorney who is well versed in both loan modifications and foreclosures.

Efforts to Save Homes Lags Behind Economic Recovery

Richard Rubin — Mon, 09 Nov 2009 13:02:28 -0500

Here in New York and indeed nationwide, many homeowners that once prided themselves on securing their dream "to own" and felt safe and sound in their homes, now find their lives roughed up and fraying along the edges. It could be with your principal residence or you could be experiencing serious difficulties with your vacation home or rental properties.

We are all living in the "perfect storm". Homeowners across our nation borrowed and bought, and are now faced with the common dilemma that they cannot refinance their home mortgage. On November 12th, 2009 the New York Times editorial "More Foreclosures to Come" predicted that even by conservative estimates, another 2.4 million homes will be lost in 2010, while prices will fall another 10 percent or so.

Negative equity, job loss, valuation - all problems which have emerged since 2006 when the real estate market began to shake and rattle, now prevents homeowners from curing their defaults or lowering their interest rates. The mortgage loan process has evicted its previous "precious" customers and no longer functions for our neighbors, family and friends. So what now that we look at the winter season with" holes in our boots" and we can't get a new pair?

The appeal of loan modifications and defending against foreclosure actions must broaden. President's Obama's speeches of two years ago have faded to a shallow gray along with our hopes and homeownership dreams. Federal and State programs plus initiatives to help our mortgage defaults have fallen short of even our lowest expectations. If we had received even the slightest commitment and achieved our lowest goals, we would have seen huge success in the revitalization of our neighborhoods.

Modifications have tremendous benefits and show a striking return of balance to those families who have toiled to obtain a loan modification or defend a foreclosure action in the courts. The promising signs for homeowners from Washington and the frenzy of hope have taken a distant place in the race for economic recovery. Many can debate whether the screaming needs to restore our neighborhoods should be quieted by other national pressures.

But one lesson is simple - we need "new boots" and without loan modifications and defending foreclosure actions, there just aren't any other boots to buy.

Should Retirement Savings be Used to Avoid Foreclosure?

Richard Rubin — Sun, 08 Nov 2009 11:20:18 -0500

It’s a fine line:...If you are concerned that a lifetime of savings, or whatever is left that is, including your retirement accounts, should be accessed to keep your mortgage payments current.

When you are receiving collection calls from your mortgage lender and are being told that foreclosure proceeding can be put on hold as long as you continue to pay and that you use all available savings plans, retirement accounts and loans against retirement savings plans in order to accomplish the goal of saving your home. Clearly, an attorney's role is to counsel and advise what efforts and actions you may undertake in the loan modification area.

Some questions that might be running through your mind:

Where monthly income is insufficient to pay the monthly debt, where do I draw the line on depletion of a lifetime of savings?
How is it possible to overcome a situation where the house is well over leveraged and there is negative equity?
Should I consider depleting my lifetime of savings and retirement assets?

There certainly are good reasons to protect your hard earned equity. If you have substantial equity in the house, many would counsel and advise to use all assets. However, is it worthwhile to enter into a temporary interest rate concession where the home has a negative equity problem? We anticipate several points of discussion along these lines. Loan modifications are designed for homeowners with hardships and certainly this situation qualifies for further discussion...

Homeowners should definitely consult an attorney before depleting their retirement savings. Most homeowners do not know the lender representative that are demanding payment, nor have a call back number or the name and address of the lender representative and therefore can not seek to discuss these demands with the lender caller again. The bottom line here is to avoid making a bad decision without thinking through the consequences and the alternatives. The lender does not expect the homeowner to have an attorney on your side. In fact we see many lenders now soliciting their homeowners with bright and bold advertisements that a 3^rd party or attorney is not necessary. What the lender fails to mention is that the first option they choose is to hire experienced and aggressive foreclosure attorneys to take your house back as quickly as can be accomplished. In our daily routines and consultations, we see the lenders overwhelmed and many times unable to adequately handle the volume of defaults that presently exist.

The modification process is not a collection practice in disguise. It is a clear and recognized alternative that should be explored before the line is crossed and a lifetime of savings and retirements plans are used to clear arrears.

Senate & House Vote to Extend Homebuyer Tax Credit

Vanessa Saunders — Fri, 06 Nov 2009 10:35:28 -0500

Buying a home is about to get cheaper by $6,500 for a whole new crop of home buyers The current tax credit of $8000 for first-time buyers has been extended to May 1st. 2010, and for repeat buyers a credit of $6,500 will now be available but only if they have lived in their current home for five of the past eight years. Home prices are capped at $800,000.

Both the Senate and the House approved extending and improving the existing tax credit this week and the White House said President Barack Obama would sign the bill today (Friday 6th Nov, 2009.)

Good news indeed for taxpayers who will now be able to claim the credit on their federal income tax returns. If the credit exceeds their tax bill, the government will issue a check. Taxpayers will be able to claim the credit on their 2009 income tax return for purchases made in 2010.

Former real estate executive, Sen. Johnny Isakson, R-Ga said yesterday "This is probably the last extension." Buyers in both groups will have to sign a purchase agreement by April 30 2010, and close by June 30.

Note to Realtors: Do YOU Need a Loan Modification?

Richard Rubin — Mon, 02 Nov 2009 12:23:47 -0500

During the past year, I have been speaking with so many of the Realtors and brokers who have personally felt the ravaging effects of the real estate crisis.

Frustrated by hard pressed attempts to remain active in the real estate industry, so many of our clients and customers focused on different means to combat the financial chaos they faced. Related businesses and ideas to reorganize credit card and family debt, loan modifications and foreclosure related services were brought in to create new streams of revenue while sales continued to slump. All the while, our brokers and agents continued to service their local neighborhoods and customers with these new ideas, trying to help these families in distress.

To paraphrase a well known proverb, “Realtor, heal thyself:……………………" This passage suggests that our colleagues, brokers and agents must begin this process of self recovery and take a good and hard look at their homes, loans and loan modifications. We have the tools, guidelines and procedures in place to process loan workouts and in fact we are talking with clients and answering their questions daily. However, many of our brokers have stubbornly refused to look at their own homes and loan modification needs during these troubled times and needlessly suffer the pangs and heartache of foreclosure notices without attending to these issues.

Whether you are a professional in the real estate industry, a civil service employee or private company worker or even a “physician”, you must recognize that loan workouts are a solution for you and your family. A step towards facing these credit issues and seeking a consultation with an attorney, in an economy like this, is a great step forward for you and your family.

Begin the process and “heal thyself” by confronting the issues because loan modifications may also be possible for you and your family.

Tax Credit Extended - Someone is Listening

Richard Rubin — Sat, 31 Oct 2009 14:46:28 -0500

“Someone is listening.” During the past year, we have read much about the First Time Home Buyers tax credit, which provides up to $8,000 to first time-home buyers but is set to expire at the end of November. The Senate now has a bill which, if passed and then send to the House for similar action, could extend this tax credit up to April 30, 2010 and may also be available to repeat buyers at a reduced credit who have owned their homes for at least five years.

Within minutes of this release to news agencies, Realtor groups and other related real estate authorities began to publicize these events. Warning: This widely circulated news is depressingly, not a done deal, but at least we know that someone in Washington is listening.

We are living in the middle of extreme and significant changes in housing, jobs and the fallout from a challenged economy. We thought that someone was listening when the Federal Government classified loan modifications and lender based work outs as its #1 priority. Simply stated, it has not happened. The statistics bear out the overwhelming failure of this initiative to keep homeowners in their homes by loan modifications.

Frustrated by so many failed Federal homeownership programs, we should all be wary of this published Federal tax credit extension until it is passed into law, but we should also be pleased that “someone is listening” in Washington, and knows that our homeownership needs must be addressed to accomplish an economic recovery.