What we ALL knew to be true is now in print.  How many short sale clients told you this same story???

http://www.huffingtonpost.com/2013/06/14/bank-of-america-lied_n_344...

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Gee, another bank scandal. I can only imagine the horrible slap on the wrist that BofA might get for this. Maybe they'll agree with the powerful feds to not do any more short sales. That'll fix them. (Can they laugh all the way to the bank if they are the bank?)

This is surely the reason for our nightmares. Also, I know a few clients who were denied modification even though they paid on time during the three months trial period. Those employees must have gotten a pretty big bonus.....

I could not find the article associated with the Huffington Post link, but I did find it on the following link: http://mydebtrelease.com/debt-news/bank-of-america-fraud-exposed

Most of my short sales that I have done for my clients have been from this very scenario.  They would try to get a loan mod, only to find out that they are required to miss two payments before the bank would be willing to look at doing a loan mod with them. Of course there were all kinds of reasons why they were either denied or the process would just lag and nothing be done.  It is a shame that they had to lose their homes, but I am thankful that I was able to at least help them avoid foreclosure.

2 years ago, my husband lost his job of 21 years.  We thought, well we should try to get a loan modification.  We were told by B of A the very same thing as many of my short sale clients, we must miss two payments.  We missed one, and I just had this bad feeling in my gut, that we were going to be denied, and that we would end up losing our home.  We quickly made our payment, and decided not to go for the loan mod.  Thank God!

before making any decisions or applying alwys ask for the definition of hardship under the loan mod program.

Loss of employment that places one in a state where they cannot meet all thier bills anbd payments monthly is usually included in the definition...

Once you have the definitions and rules regarding eligibility then it makes it easier to enforce them with the holder/agent involved.

Many here have given the regulations and rules as much as is known. Document everything well always...

Dirk, seems none of that matters really.  Their best trick is to approve the trial mod, the owner makes the payments fully and on time, then BofA says the loan mod has been denied....and if they don't repay the difference b/t the old payment and the modified trial payment, they get foreclosed on.

Right on the money Wendy. 90% or more will get denied and be in a worse position than when they started the trial loan mod. I keep hearing of agents that won't approach a homeowner that is doing a trial loan mod. That is the homeowners that need to be contacted!!!! There are lots of listings out there with trial loan mod homeowners.

Any attorney that does loan modification will back up the numbers. Harrison Marketing Group is a good one if you are in CA, I'm not, but they will send you marketing info even if you are outside CA. Google "trial loan mod" and find all the info you can from attorneys. I attached the first good article I ran across, as an example. Contact homeowners in default and act like a advocate instead of a Realtor looking for a listing. Put them in touch of a good attorney that will send them back to you for the 85% of homeowners that they cannot get qualified for a loan mod. A good attorney will not submit paper work for a trial loan mod if they have no chance to qualify for a permanaent loan mod. Too many homeowners contact their loan servicer for a trial loan mod and the servicer will send them through the trial loan mod, even if they know they have no chance of getting a permanent loan mod. I attached a file from a good article I ran across a couple of weeks ago.

http://www.harrisonmarketinggroup.com/

http://www.bankruptcylawpros.com/still-think-loan-modification-migh...

Attachments:

A new report from Special Inspector General for the Troubled Asset Relief Program points to disturbing numbers, but offers no reason for the high rates.

Treasury's data shows that the longer a homeowner remains in HAMP, the more likely he or she is to redefault out of the program. As of March 31, 2013, the oldest HAMP permanent modifications, from the third and fourth quarter of 2009, are redefaulting at a rate of 46.1 percent and 39.1 percent. HAMP permanent modifications from 2010 also had high redefault rates, ranging from 28.9 percent to 37.6 percent.

http://www.cnbc.com/id/100674924

It will be interesting to see how later HAMP mods are performing.

My point is that the holder take funds from the fed for the modification, even if trial. Which means that the bank is in CONTRACT with both the borrower and the government. If hte bank violates the approval process they have violated two contracts and were "not in good faith".

Remember that IF an agent can quote the requirements and if the borrower can show they met them and that they performed under the trial...there may be many types of repurcussion in FC court and with the feds (CoC?).  Including inability to gain any deficiency at all! 

Best interest of the client is that the agent knows all of this and can help document it for the borrower's benefit later.

From the descriptions given, the holder is using the federal program to gain time and determine which houses will make them more with FC.  This is itself a "not in good faith" action.  Hard to prove....except that a 90% failure against those that apply is very heavy...especially if those that perform the mod and are denied after proving they can perform....this stat needs to be looked at carefully!.

There are times I have determined some qualification requirements for a client and suggested that they will not qualify and to NOT apply...this can be done by DEMANDING that certain qualifying questions be asked and aswered BEFORE the hard application (especially disqualifiers like under employment). If the client does not meet requirements in accordance with the answers given, then have them write a letter stating that the agent has already explained  that they don't qualify for the mod program.  That ends the low pay cycle and catch up harming the client credit or making it worse. IT can also help with extending possible other options and move them to SS much quicker.

We all need to learn the rules of loan modifications. If a homeowner makes all of his trial loan modification payments on time, the bank is still not required to do a permanent modification. If it is in the best interest of the bank to foreclose, they will foreclose. We need to understyand that the banks view these people as high risk, yes, not paying your mortgage will make you look high risk. I know it sucks, but banks are in the business of loaning money, not helping borrowers that haven't paid in five years. And yes, the bank employess do get paid bonuses. They don't get paid bonuses for not giving permanent modifications, but they get bonuses for submitting applications into the trial loan modification program. Our tax money pays millions of dollars to these banks for starting them in the trial loan program, where less than 10% will receive a permanent loan modification. Getting a "good" loan modification is like hitting the jackpot. As Realtors, we all need to learn HARP and teach homeowners in default! Once you learn how trial loan mods work, you will understand that 90% of the people that are doing trial loan mods should be short selling. 

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