Loan Modifications: Tips for Dealing with Loan Servicers

Having trouble paying your mortgage? To find out if you qualify for a loan modification, you’ll have to work with a loan servicer – the company that collects your mortgage payments.

But dealing with these companies can be frustrating and confusing. Here are a few tips for working with your servicer:

• Keep careful written records of every contact you have with your servicer, including logs of your phone calls and copies of written correspondence.

• If your servicer makes a promise – to credit a payment or modify your loan, for example – get it in writing. That includes promises that a foreclosure sale will be stopped.

• If you’ve received notice of a possible foreclosure sale and your servicer later says the sale has been halted, show up at the scheduled time anyway. Many borrowers have had their houses sold without their knowledge.

• Your servicer is required to send you a hard copy of your complete payment history and other information. You just need to request it in writing. If you have a dispute with your servicer or want to understand fees you’re being charged, write to the address on your mortgage invoice labeled “qualified written requests” or “RESPA requests.” RESPA is the Real Estate Settlement Procedure Act, which governs servicers’ responsibilities to homeowners.

• If you’re seeking a loan modification, request in writing that your servicer tell you who owns your mortgage loan. Some banks and investors have policies on which loans they’ll modify. So having the record will keep your servicer from arguing they can’t help you because the investor refuses to modify the loan.

• If you don’t understand something, deal with it immediately. Write to your servicer, explaining your concern, and request an explanation. You also can call the servicer to seek a speedy resolution. In any case, put all communication in writing in case you need to refer to it later.

• If your servicer tells you to stop making payments because you’ve applied for a loan modification, ignore that guidance. Keep making payments for as long as possible. If you can’t make full payments, pay as much as you can. Otherwise, your loan will accrue more interest, and it will cost you more in the long run. Many servicers have been accused of going ahead with foreclosure after telling borrowers not to pay.

• If you can’t resolve your problems or you think your servicer is violating your rights, contact a nonprofit housing counselor or seek legal help. Housing counselors will help negotiate a loan modification for free. Be wary of services that offer to renegotiate your mortgage in exchange for an upfront fee.

If you want to know whether you qualify for a loan modification, check out Treasury’s homeowners Web site: http://www.makinghomeaffordable.gov.

U.S. Considers Remaking Mortgage Giants

The Obama administration is considering an overhaul of Fannie Mae and Freddie Mac that would strip the mortgage finance giants of hundreds of billions of dollars in troubled loans and create a new structure to support the home-loan market, government officials said.

The bad debts the firms own would be placed in new government-backed financial institutions – so-called bad banks – that would take responsibility for collecting as much of the outstanding balance as possible. What would be left would be two healthy financial companies with a clean slate.

The moves would represent one of the most dramatic reorderings of the badly shattered housing finance system since District-based Fannie Mae was created by Congress to support mortgage lending during the Great Depression. Both Fannie Mae and Freddie Mac, based in McLean, have government charters to buy home loans from banks, which they then repackage and sell to investors. The banks can then use the proceeds to offer more loans to homebuyers.

The leviathans became emblematic of the financial crisis when they were effectively nationalized in September amid a market meltdown that revealed much of their holdings to be troubled. The government has since pledged more than $1.5 trillion, including $85 billion in direct aid, to keep the mortgage market working through Fannie Mae and Freddie Mac.

The proposal, which is preliminary and one of several under discussion, is scheduled to be taken up by the White House’s National Economic Council on Thursday.

“It should come as no surprise that the administration is thinking through” wholesale changes to these companies, said Andrew Williams, a Treasury Department spokesman. “We are in the preliminary stage of the process, the systematic development of options has not taken place, and no decisions have been made.”

Internal discussions over the future of the companies began earlier this year during the regulatory reform planning process and now are entering a more serious phase. National Economic Council Director Lawrence H. Summers has long wanted to overhaul the companies.

The government’s efforts so far “have taken the risk out of those two firms,” Treasury Secretary Timothy F. Geithner said in a recent interview. “The only question that remains is what form, what structure they ultimately will take.”

In an interview Wednesday announcing that he would step down later this month, James B. Lockhart III, the chief regulator of Fannie Mae and Freddie Mac, said there needs to be a “good bank, bad bank” structure.

The “bad bank” would be a depository for Fannie Mae’s and Freddie Mac’s toxic assets. Then, the government could create new companies, if it chose to do so, that would attract private investment in support of mortgage finance.

Options for the “good banks” include consolidating the firms into one government agency, leaving mortgage finance to private banks or maintaining a hybrid model.

The National Economic Council has looked at the “bad bank” option, among many others, in several internal policy papers. Any final decision would come after talks involving the White House, the Treasury, the Department of Housing and Urban Development and the Federal Housing Finance Agency.

A major problem is that the firms own and insure trillions of dollars of existing mortgages. With the economy still in a deep recession, joblessness rising and defaults on home loans expected to continue to go up, there is great uncertainty over the size of future losses at Fannie Mae and Freddie Mac. That, in turn, is likely to drive investors from committing money to the companies.

Fannie Mae and Freddie Mac existed for years as odd hybrids, created by government to support housing but owned by private shareholders. (They are now majority-owned by the government.) Over the years, the unusual status has fed concerns that the firms exploited their quasi-governmental role to borrow money at very low rates and therefore grow far larger than was sustainable. At the same time, they had a duty to shareholders to maximize profits, leading them to take on bigger risks.

Until the future of the firms is worked out, the Obama administration has been using them to carry out its housing recovery program, including restructuring mortgages to avoid foreclosures.

In addition, the Federal Reserve has bought well over $1 trillion worth of mortgage-related securities and debt from Fannie Mae and Freddie Mac. That further helped to lower interest rates on home loans. The government also has pledged up to $400 billion in direct investments in the firms.

Summers has long thought that the old structure of the companies posed a danger to the financial system. In 1999, when he was Treasury secretary, he warned lawmakers that Fannie Mae and Freddie Mac had grown so large that if they stumbled, the damage to the U.S. economy could be staggering.

Few heeded him. Now, once again a leading voice on economic policy, Summers has the platform to restructure the mortgage giants.

The revamping of the firms was almost included in the administration’s June white paper that proposed an overhaul to the federal regulation of the financial system. But after determining that they had to craft a careful exit of the government’s aid for those companies, Summers and Geithner decided to put the issue off.

Source: Washington Post

Florida Realtors Have Access to Listings in France

The Federation Nationale de l’Immobilier (FNAIM), the French association of real estate professionals, has contracted with Immobel, a provider of international real estate technology and cross language marketing services, to translate all French real estate listings into English and make them available for U.S. Realtors to market on their websites.

Over the last two years, members of the Realtor Association of Greater Miami and the Beaches (RAMB) and the Sarasota Florida Association of Realtors (SAR) participated in a pilot program, offering translated Paris listings through Immobel’s Global Listing Exchange; meanwhile, Paris brokers marketed Miami and Sarasota listings translated into French to their own clients.

“French buyers represent an important market segment in South Florida,” says Teresa King Kinney, chief executive officer of RAMB. “We have seen an incredible increase in serious buyers from Paris and the French markets. These buyers are knowledgeable, sophisticated and serious about owning in Miami.”

Based on the success of the pilot program, FNAIM is expanding the Immobel Global Listing Exchange service to include all of the listings in France.

Starting Sept. 15, FNAIM members will be able to display more than 300,000 U.S. real estate listings translated into French. Global Listing Exchange participants include Realtor organizations in Florida, California, Las Vegas and Washington, D.C. Like their American counterparts, FNAIM members will earn referral fees from the sale of American real estate to their French clients.

FNAIM will use Immobel’s Global Listing Exchange platform to deliver the translated versions of more than 500,000 French listings – from country Chateaux to Paris apartments – through widgets embedded into Realtors’ websites. U.S. Realtors will earn referral fees on the sales of French property that result.

Referral fee agreements between the international property professionals are supported by the protocols of the International Consortium of Real Estate Associations (ICREA). Both the National Association of Realtors (NAR) and the Federation Nationale de l’Immobilier (FNAIM) are ICREA members.

South Carolina-based Immobel uses professional linguists to translate property listings into 13 languages. Immobel developed and owns the technology powering the Global Listing Exchange. More at www.Immobel.com.

The Federation Nationale de l’Immobilier, La FNAIM represents a membership of more than 12,000 property brokerages with approximately one hundred thousand property professionals. Members include brokers, property managers, commercial property professionals, appraisers and other professionals in the real estate industry in France. Property professionals in France are licensed and also participate in a guarantee fund

The International Consortium of Real Estate Associations is composed of more than 30 national associations. Current member associations represent approximately half of the world’s GDP.

Source: Florida Association of Realtors

New Home Valuation Code Becomes Barrier to Closings

The new federal Home Valuation Code of Conduct (HVCC) effective May 1, 2009 has created numerous situations of low appraisals on home sale transactions.

Some real estate leaders say the Home Valuation Code of Conduct is delaying financing approval, inaccurately valuing homes and employing inexperienced appraisers. Problems? Buyers distrust their purchase decision and may not be able to obtain financing. Sellers are stuck in their homes and cannot move on.

Two longtime appraisers also forecast more residential appraisers leaving the industry as a result of the changes.

The decision to establish the code was made last year, when government-regulated mortgage giant Fannie Mae, along with the Federal Housing Finance Agency, decided to set up new appraisal policies to create more separation between appraisers and lenders.

The regulations are slowing the process for potential homeowners to get financing, with the process now taking about 30 days when before it took only a few days.

The delay in approval gives an added advantage to some buyers. With residential inventory starting to fall, for those properties in short supply, the buyer that doesn't have to go through the mortgage process will have the advantage.

While most people new the new regulations can help exclude those who scam the system, others in the market are paying a big price.

For example, some appraisers are doing below-value appraisals on properties. Sellers who are so desperate to sell may accept the low appraisal, but I think the best indication of value is what a buyer is willing to pay.

It's important for appraisals to be accurate and the best way to do that is to work with local appraisers who know the market.

Ashley Bosch, president of the Builders Association of South Florida, agrees on the importance of having not only an objective appraiser but one who understands the market and is familiar with the area to make a fair assessment.

Mr. Bosch said the biggest problem builders are having with the appraisal process is that some appraisers are taking into account real estate owned (REOs) properties owned by a bank as a result of foreclosure and short sales as comparables.

"If that's a distress sale, obviously it will be sold at a lower value than the market will accept because they [banks] need to get rid of it," he said.

A National Association of Home Builders survey shows that the problem is causing some signed sales contracts to fall through the cracks.

About 60% of builders surveyed reported inadequate appraisals and labeled as the biggest issue the use of foreclosures and distressed sales as comparables for new single-family homes.

In the survey, 54% reported appraised values coming in lower than the cost of building the home.

"If they are not taking into account the true cost of building the home, they are saying the home is not worth what it cost to build the home," said Mr. Bosch, who is a local residential and commercial developer.

Mr. Bosch said the builders association is calling on federal regulators to adopt concise guidelines that let appraisers assess values more fairly.

Philip Spool, an appraiser for 36 years in Miami-Dade, agrees that some inexperienced appraisers aren't making appropriate appraisals because they're getting pressure from the appraisal management firms for a quick turnaround.

Mr. Spool said with foreclosures and short sales common today, rushing through an appraisal cuts time for looking at fair comparable selling prices of similar properties in the area and conducting a proper home inspection.

"The physical condition of the interior of foreclosed homes is often far inferior" to non-distressed houses, he said, and sometimes appraisers don't make the appropriate adjustment.

The decision of some lenders to use appraisal management companies to comply with the new regulations is also cutting profits for appraisers.

Joni Herndon, chair of the Florida Real Estate Appraisal Board, said some management companies use rotational lists when sending appraisers to conduct valuations. That's why real estate professionals are complaining about the inexperience of some appraisers, Ms. Herndon noted.

Another factor, she said, is that since the companies keep a percentage of the appraisal fee, some seasoned appraisers are refusing to work for less pay.

Ms. Herndon, an appraiser in Tampa, said she recently experienced an instance in which an Orlando appraiser went to Tampa to appraise a waterfront home and spent only 30 minutes there.

The lender was notified of the appraiser's lack of experience by the homeowner and asked her company to do the appraisal, Ms. Herndon said.

Since the new rules were enacted, Ms. Herndon said she has lost professional relationships she had built over 20 years with some ethical mortgage brokers.

"It took me 20 years to develop relationships with people and now those relationships are broken," she said. "Now, we are back to going to the lowest common denominator."

The changes are driving some appraisers to move away from mortgages, she said. They instead are working more with Realtors and doing more litigation and divorce estate work.

Mr. Spool, the longtime appraiser who also teaches appraisal classes at Miami Dade College, also forecasts more appraisers leaving the field or working with non-lenders.

"As time goes on, better appraisers are going to leave the industry or not work for AMCs (Appraisal Management Companies) because they are not taking a pay cut."

Source: Miami Today News