What the lenders don’t want you to know.
What the lenders don’t want you to know.
We are not accountants, we are not attorneys, and we are not giving you legal advice. We are advocates who fight for your right to be educated. Real Estate Professionals cannot tell you this information, they can ONLY give you understanding of what your situation means. This is exactly what we are doing. We want you to know these things so YOU can investigate your options WISELY. This will put you in the driver’s seat if you choose this route, and do what you can to protect yourself.
First off, 57% of all Loan Modifications are set up to fail. ONLY you can stop this. You must ask yourself do you really want this home, because it is YOUR desire to save it that you can ultimately make that happen. The banks already know if a home is in distress, the odds are against you, and they will do whatever they can to get as much money out of you as possible. Our economy right now is more political than it is Financial and this State of Emergency is only being drawn out further. Understanding this will allow you to fight for what your family really needs. Remember this at all times, DO NOT HAVE MERCY FOR THE BANKS, THEY HAVE NONE FOR YOU. ONLY YOU have the POWER to fight for your home. But you have to want it.
At some point we as a nation have to stand up against the financial institutions to let them know, YOU REFUSE to be one of THEIR statistics. LENDERS MUST AGREE to reduce your payments to 38% in a modification, 31% under Obama’s Loan Modification plan. MAKE YOUR LENDER PUT EVERYTHING IN WRITING. Do not let them try and persuade you over the phone. Remember you have to also be reasonable and realistic. You cannot ask for the gold if you are outside certain parameters. If the Lender cannot make a reduction under these programs then Short Selling your Home is ultimately better than going to Foreclosure for ONLY ONE REASON; to stop the market from declining further and to help bring back stabilization to our Economy. Now understand that cram downs under Bankruptcy are in flux. For investors you will need the help of a good attorney, they are worth what they are asking for, but be prepared to invest around $25k up front.
If you are in a situation where you need to stall, there are ways. One of the best books on the market today is 23 Legal Defenses to Foreclosure I know many of you have probably heard the “produce the original note” and the “king defense” against a bank.
Many banks are sloppy because they are so big, but do not let that fool you. They are well funded in their legal department and have strong held their attorneys over several of the DA’s in the Justice Department. To the point where they have gone after attorneys pressing charges against the banks and had them disbar over things like, advertising or other technicalities. Most attorneys simply stopped trying. The fact of the matter is that you would need a min $100k retainer to begin to fight this type of defense.
More effective approaches could simply be proving non-assignment of the lien and if they try to correct their motion, file a motion to dismiss for lack of standing. These do not always hold and you need to have your attorney ready to catch them. Yes some have won the rights to their home, but many judges are not allowing it to stand.
For some out there who were affected by pump and dumping (which is the act of a group of people buying into a community with the intent to walk away from their home for illegal gain) Proving unconscionability (bad acts) is difficult because the Federal Government has these labeled under on-going investigation. That means that an attorney cannot do anything until the investigations are concluded. Respa and Til violations cam be argued, but there are limitations unless you can prove failure to disclose material facts pertaining to the loan. Good news is that if you suspect this has happened you can request this be move to the criminal investigations department of your bank. This will delay their actions until a determination can be made on how to proceed. Usually meaning how they can proceed against you. Have proof.
The facts of what happened in our economy are simply to many people taking advantage of the system in place at the time. Sloppiness in recordation and failure to disclose ran ramped at all levels. The banks sold negative amortization loans to brokers and banks with incentives to these organizations to pay more money to raise the margins of these loans knowing full well the loans were structure to capture the homes equity and promote default. Meaning that they could adjust your interest rate above normal adjustment rates. Banks made money of Federally insured loans and had the benefit any profits left over.
Sub Prime lenders were not taking proper protocols in qualifying clients, especially on stated income stated asset loans, which in turn led to brokers and lenders placing loans for personal gain, this led to many pump and dump areas across the nation. When many people figured out that all they had to do was fog a mirror to get a home, they signed loan documents to have a roof over their heads not looking ahead at what the adjustments would do. To make things even worse, when the Government actually began cracking down on these activities, they initiated panics across the nation.
We the People (Remember these words?) have the power to stop this. The economy is in our hands now. We can either crash it or rebuild it. This is why we like organizations like NACA who go after the banks and place common sense back in our hands. This is what the banks really do not want you to know.
Credit is important, but chances are if you are here, your credit is shot. If it isn’t, then read further.
Here is how you can protect yourself if you decide on a Short Sale
First, find out if your loan is a Fannie Mae insured loan. A good Short Sale Expert will already know that they can charge a higher commission, up to 6% on a Fannie Mae Loan. http://loanlookup.fanniemae.com/loanlookup/ So they can hopefully offer out a little more commission to a Cooperating Broker.
Second, understand this, if you are with a Sub Prime lender your short sale will most likely go a lot smoother than a Prime or well known banking industry.
Third, understand that if the loan on your home WAS NOT USED to make improvements on your home, you will most likely have an Adhesive Contract and will be earning Phantom Income on ANY DIFFERENCE the lender forgives on the sale itself. President Bush passed a law for this up to $2,000,000 on owner occupied property to protect us from this, however, YOU MAY NOT QUALIFY for it, and you may receive a 1099-c from the lender the following year after the sale. TALK TO A CPA, TAX Advisor, someone who can let you knows about this. If you fall into this, you will be responsible for paying taxes on this Phantom Income. Only YOU can make the determination if the tax consequences outweigh the credit implications. The Short Sale still will look better than foreclosure regardless of a bankruptcy.
IF YOU ARE GOING TO BE HIT WITH A 1099-C, consider filing Bankruptcy, Chapter 7. It is a defense against this. If you do not re-affirm a debt, it cannot be used as income against you PERIOD. Not all states have jumped on board the forgiveness train so watch for this and ask questions.
A good Short Sale expert will use a bankruptcy to their favor. Work with an agent who can work with a bankruptcy attorney who in turn will work with the banks’ attorney who in turn can still structure a short sale during the Bankruptcy process. Most likely they will close after the bankruptcy has been discharged, but you will not have a phantom gain and you will have an opportunity to start over.
Only by starting over can we rebuild. There is no shame in seeking Federal Protection; the banks are doing it every day. Bankruptcy is just another form of Federal Protection and it is there to protect us, not destroy us. When you truly understand this, you will begin to see why we as a Nation, need to take a stand.
We need to take back what the financial industry has stolen from us. There is NO ONE BETTER suited to do this than YOU.