California Loan Modification Attorney Blog

Last week thousands of homeowners currently with Bank of America were notified that the servicing of their home loans has been transferred to Nationstar.  The transfer will take effect on July 1, 2013 and will be problematic for those homeowners currently in loan modification reviews or in the middle of short selling their home with Bank of America.  Bank of America appears to be very focused on transferring a large portion of their servicing portfolio.  In the past year Bank of America has transferred loans to Select Portfolio Servicing, Select Loan Servicing, Ocwen, Everhome and RCS.  These transfers cause headaches for homeowners currently engaged in loan modification reviews.  Not only does the homeowner typically have to start over with the new servicer, it is possible that homeowners will no longer be eligible for the same modification programs that they were being considered for while their loans were with Bank of America.  Servicing transfers mean that the investors have entered into a new servicing agreement with the new servicer and loan modification rules and guidelines are part of that new servicing agreement.  For example, many loans that were eligible for a Department of Justice (“DOJ”) principal reduction loan modification review may no longer be eligible for DOJ upon transfer.  Unfortunately, there is not much a homeowner can do about that.

The important message is for homeowners having Bank of America as their servicer is to push to get their loan modifications resolved before another transfer takes place.  Homeowners that have been struggling to obtain a loan modification without the assistance of a professional might want to consider seeking out professional assistance at this time.  Failure to act could result in a homeowner either losing eligibility for a loan modification program or being transferred to a more difficult servicer.  

 Michael Gaddis has a very strong relationship with Bank of America and prefers working with Bank of America over other servicers.   To schedule a free consultation with Michael Gaddis please call 888-242-2272. To view copies of the Bank of America Loan Modifications obtained by Michael Gaddis as well as other successful loan modifications procured by Michael Gaddis please click the following links: http://californialoanmodificationattorney.com/trials-modifications/ and http://californialoanmodificationattorney.com/trials-modifications/approved-trials-modifications-pg-2/

Every single day I get 10-12 phone calls from homeowners throughout the State of California asking me to review their loan modification scenario and determine if they truly have a chance at obtaining a loan modification.  During the past couple of weeks the scenarios that homeowners have been giving me are becoming more and more difficult.  The question is, what makes a loan modification scenario difficult?  Once I have the facts surrounding the homeowner’s scenario it does not take me long to determine the homeowner’s odds of success.  Some of the factors that make a loan modification application more challenging are as follows:

1.  Equity.  The bottom line is that equity is the enemy of loan modifications.  Loan modifications are not a right that a homeowner is entitled to, but rather a loss mitigation tool used by the investor owning the loan.  In other words the investor is in danger of losing money so the investor is looking for ways to minimize any potential losses.  So the investor weighs the risk of loss with the needs of the homeowner and determines whether the investor will lose more money by modifying the loan or foreclosing.  The problem with homeowner’s with equity is that the risk of loss to the investor is minimized if not extinguished all together.  When there is no danger of the investor losing money there is little incentive for the investor to agree to a modification and that homeowner will typically fail a loan modification review on the basis of Net Present Value (“NPV”) failure (for more information about NPV please click the following link   http://wp.me/p2NGF4-kT).  Homeowners also need to remember that the investor is only looking at what the investor is owed in relation to the first lien.  The investor could care less if there is a 2nd or 3rd lien on the property.  Since the first lien holder is in first position the first lien holder gets all of the proceeds from a sale to satisfy his lien, the junior liens only gets what is left, if anything.  Again, equity is the enemy of loan modifications.

2.  Self-Employed Homeowners.  From an underwriting perspective, self-employed homeowners are much more challenging than W-2 wage earners.  As such, self-employed homeowners have a very difficult time getting through the loan modification underwriting process.  The main reason is that there are many ways to present your self-employed income and the lenders have the discretion to independently determine what a homeowner’s self-employed income is.

3.  Multiple Houses.  Homeowners that own multiple properties also have a very difficult time obtaining a loan modification.  The primary reason for this is that owning multiple properties makes the underwriting process more involved.  The more involved the underwriting process the more difficult the loan modification review process.

4.  Loan Amounts Over $729,000.  Loans over $729,000 are not eligible for HAMP which limits the available programs.  Since loans over $729,000 are typically investor based modifications the level of scrutiny goes up as the loan amount increases.  High dollar loan modification reviews can be extremely lengthy and involve numerous document requests.

5.  Multiple Sources of Income:  Homeowners that have multiple sources of income including, but not limited to, room rental, family contributions, 2nd & 3rd jobs, mixtures of W-2 and self-employed income, disability, unemployment, etc. have a very difficult time presenting their financial situation to loan modification underwriters resulting in a more complicated review processes.

6. Negative Amortization Loans: Negative amortization loans are extremely problematic due to the fact that the minimum payment associated with the loan is usually very low.  Low scheduled payments create problems because the lender is typically looking for a solution that will provide the homeowner with a modified payment lower than their regularly scheduled payment.

These are just a few of the factors that can create a difficult loan modification scenario.  Most of these obstacles can be resolved if you know what you are doing.  However, if you do not know what you are doing, and 99% of homeowners and 3rd Parties do not, then you will merely get frustrated and end up giving up in the end. 

If you would like to take advantage of a free consultation with me please contact me at 888-242-2272 and I will review your situation and let you know my thoughts.

The Law Offices of Michael Gaddis recently obtained a trial Ocwen Loan Modification for a homeowner in Murrieta, CA.  The homeowner had previously received a loan modification from HomEq Servicing before the homeowner was transferred to Ocwen.  The previous modification was a 5 year fixed interest-only at 4%.  After the initial 5 years the terms reverted back to the original terms of the loan.  The homeowner ran into difficulty when, after the transfer, Ocwen’s system did not recognize the HomEq modification.  Instead, Ocwen’s system recognized the original terms of the homeowner’s loan which caused a drastic increase in payment.  The homeowner went late due to this large increase and retained Michael Gaddis to assist her in dealing with Ocwen.  At first the homeowner wanted Michael Gaddis to convince Ocwen to reinstate the previous loan modification.  However, Michael Gaddis told the homeowner that the previous modification was only a temporary fix and that the homeowner was going to run into difficulty when the note fully amortized.   Knowing Ocwen’s loan modification programs and having a good relationship with Ocwen Michael Gaddis suggested attempting to obtain a 2nd loan modification which, if successful, would result in a permanent fix.  The buyer agreed that Michael Gaddis’ suggestion was the best course of action. 

At first, Ocwen tried to deny the homeowner stating that she did not qualify for HAMP or an in-house modification.  When Michael Gaddis asked why the homeowner did not qualify for HAMP he was told that the homeowner had already received a HAMP loan modification.  Michael Gaddis knew 1) that the homeowner’s prior modification was not a HAMP and 2) that even if it was the homeowner could be eligible to be reviewed for HAMP Tier 2.  So Michael Gaddis escalated the file to his contacts at Ocwen and told them everything that had occurred.  He also provided Ocwen with a copy of the first loan modification that the homeowner had received from HomEq.  Michael Gaddis’ contact at Ocwen told him that he would look into it and see what he could do.  After 3 weeks of review Michael Gaddis’ contact advised Michael Gaddis that the homeowner was approved for a trial Ocwen Loan Modification.  The trial was an internal Ocwen Loan Modification and not a HAMP.  Michael Gaddis did not care because the terms of the loan modification were favorable to the homeowner.

The trial Ocwen Loan Modification states that upon successful completion of the trial period the homeowners interest rate will be fixed for the life of the loan at 3.02443%.  The new PITI payment is $1,876.59 which represents a potential monthly savings of nearly $400 a month from what the homeowner was paying on the previous HomEq modification.

 As always Michael Gaddis and his staff will continue to monitor the homeowner’s file during the trial period in order to ensure that a final Ocwen Loan Modification is obtained.  To view a copy of this trial Ocwen Loan Modification as well as other successful loan modifications procured by Michael Gaddis please click the following links: http://californialoanmodificationattorney.com/trials-modifications/ and http://californialoanmodificationattorney.com/trials-modifications/approved-trials-modifications-pg-2/

The Law Offices of Michael Gaddis recently obtained a Final Wells Fargo Loan Modification for a homeowner located in Anaheim, CA.  Historically, one of the most difficult lenders to obtain a loan modification from is Wells Fargo.  Fortunately, loans that were formerly Wachovia loans are a little easier to negotiate than loans that were originated at Wells Fargo.  Wachovia loans are handled differently within Wells Fargo and, to be honest, the Wells Fargo employees that handle Wachovia loans seem to be better trained and more efficient than their counterparts.  The homeowner and his wife had a more difficult situation for Wells Fargo underwriters to analyze.  The husband was self-employed and his wife was a nurse.  As a nurse the wife worked at 2 different hospitals.  The issue with the wife’s income arose from the way she was paid.  She had so many different “shift differentials” and other types of pay on her paystub that Wells Fargo had a difficult time determining what her income was.  During the process Wells Fargo requested no less than 8 letters of explanation (“LOEs”) regarding the homeowners’ income.  Michael Gaddis and his staff made sure that Wells Fargo received each and everyone of the LOEs that Wells Fargo requested.  After a few months of underwriting, Wells Fargo finally issued a HAMP trial loan modification.

The homeowners completed their trial and on May 6, 2013 the homeowners received a final HAMP Wells Fargo Loan Modification.  The homeowners were ecstatic to say the least.  As part of the loan modification Wells Fargo permanently forgave $155,156.59 of the principal balance leaving a new unpaid principal balance of $370,000.  The terms of the Wells Fargo Loan Modification call for an initial interest rate of 2% for the first 5 years followed by 3% in year 6 and fixing at 3.375% for the remainder of the term.  The new principal, interest, taxes and insurance (“PITI”) payment of $1,616.66 represents an over $1,700 per month reduction from what the homeowner was paying prior to becoming delinquent.

 As always, Michael Gaddis and his staff will continue to monitor the homeowner’s file in order to ensure that 1)  the final Wells Fargo Loan Modification paperwork is received by Wells Fargo; 2) Wells Fargo properly uploads the modified terms into their system; and 3) Wells Fargo returns the homeowner’s file to regular servicing.  If you would like to see a copy of the Wells Fargo Loan Modification referenced in this article or review other loan modifications obtained by Michael Gaddis please click the following links:  http://californialoanmodificationattorney.com/trials-modifications/ and http://californialoanmodificationattorney.com/trials-modifications/approved-trials-modifications-pg-2/.

Obtaining a Bank of America loan modification can be extremely difficult to obtain, especially for the self-employed.  There are many reasons why self-employed borrowers have a more difficult time than W-2 wage earners but the realty is that the majority of the people that contact Michael Gaddis for a free consultation are self-employed.  The majority of homeowners that attempt to modify their loan on their own experience frustration and disbelief as loan modification application after loan modification application are denied.  The Law Offices of Michael Gaddis recently obtained a trial HAMP Bank of America  loan modification for a homeowner located in Valley Center, CA.  The homeowner, had already received one loan modification from Bank America and had made over 25 payments on it before becoming delinquent again.  To the homeowner’s credit his previous Bank of America loan modification was not very good.  It was a high interest rate interest-only that converted into a fixed principal and interest at 5.5% but on an amortization schedule of 21 years.  The short amortization was going to cause a huge increase in his payment.  The homeowner was self-employed and had tried to modify on his own.  He was referred to Michael Gaddis by a friend of his with a similar situation that Michael Gaddis had helped. 

The trial payment of $2,202.00 represents a nearly $350 a month reduction from what the homeowner was paying prior to becoming delinquent.  However, keep in mind that as is the case with all HAMP Bank of America loan modifications, the $2,202.00 represents a future principal and interest payment (as well as taxes and insurance) while the homeowner’s previous, and higher, payment was interest-only.  Plus, HAMP modifications are typically step-rate modifications which have very well thought out payment escalations.  This Bank of America trial loan modification was a big win for the homeowner who nearly cried when he obtained it.  The homeowner’s first trial payment is July 1, 2013.  The trial ends on September 1, 2013.

As always Michael Gaddis and his staff will continue to monitor the homeowner’s file during the trial period in order to ensure that a final Bank of America loan modification is obtained.  To view a copy of this trial Bank of America Loan Modification as well as other successful loan modifications procured by Michael Gaddis please click the following links: http://californialoanmodificationattorney.com/trials-modifications/ and http://californialoanmodificationattorney.com/trials-modifications/approved-trials-modifications-pg-2/

The Law Offices of Michael Gaddis recently obtained a final Bank of America Department of Justice loan modification for a homeowner located in Antioch, CA.  Homeowners frequently put all of their trust and faith into the hands of their designated representative at their lender with the belief that 1) their lender has the homeowner’s best interests as their #1 priority; 2) their designated representative is going to provide them with valuable information and guidance that will give them an edge in their pursuit of a loan modification; 3) their designated representative has special inside knowledge or skills that will help them advance their loan modification package; 4) in the event something goes wrong their representative is the best source on what to do; and 5) in the event of an appeal, their dedicated representative will be their advocate through the appeal process.  This Bank of America Department of Justice loan modification is an example of why all of those beliefs are not true.  This homeowner contacted Michael Gaddis six (6) weeks away from a trustee sale.  He had been working diligently with his dedicated Bank of America representative for over a year and a half but was beginning to lose faith.  After taking advantage of a free consultation with Michael Gaddis the homeowner decided to retain Michael Gaddis to be his advocate at Bank of America.  Michael Gaddis knew that the homeowner’s Bank of America representative was not advising the homeowner properly and that the Bank of America representative was definitely not familiar with Department of Justice loan modification underwriting guidelines.  The best thing this homeowner did was to contact Michael Gaddis for a free consultation.  Upon receiving his final Bank of America Department of Justice loan modification documents the homeowner told Michael Gaddis, “I am convinced that had I not retained you that I would have lost my house.  There is no doubt in my mind.”  Homeowners need to remember that lenders represent investors and that lenders have their investors best interest as their priority, not the homeowners’ best interest.  Homeowners also need to keep in mind that their dedicated representative is not their advocate, merely a communication conduit and document collector.

The terms of the final Department of Justice loan modification call for a principal reduction of $97,623.77.  The new modified interest rate of 2.625% is fixed for 5 years after which the interest changes to 3.625% and is fixed for the remainder of the term.  The new principal, interest, taxes and insurance payment of $1,950.88 is over $400 a month less than what the homeowner was paying prior to becoming delinquent.

As always, Michael Gaddis and his staff will continue to monitor the homeowner’s file in order to ensure that Bank of America 1) received the final Department of Justice Loan Modification paperwork; 2) properly uploaded the new Department of Justice loan modification terms; and 3) returns the homeowner’s file to regular servicing.  If you would like to see a copy of the final Bank of America Department of Justice Loan Modification referenced in this article or review other loan modifications obtained by Michael Gaddis please click the following links:  http://californialoanmodificationattorney.com/trials-modifications/ and http://californialoanmodificationattorney.com/trials-modifications/approved-trials-modifications-pg-2/.

Recently I have been made aware that Bank of America has been removing eligibility flags from loans that were formally eligible for the Department of Justice loan modification program.  I noticed that many new clients that had been previously denied were not being reconsidered for the Department of Justice Loan modification program when the file was being resubmitted under a change in circumstances (“CIC”).  Normally, if a borrower was eligible for a Department of Justice loan modification review and the borrower met the criteria established for a CIC review, the borrower would be able to be re-reviewed for the program.  As more and more of my clients have had their Department of Justice loan modification eligibility flag removed I inquired within Bank of America in order to investigate what was occurring.  Sure enough I was told that Bank of America had more than exceeded the principal reduction limits that Bank of America was obligated to perform under the Attorney General settlement.  While they are still processing many of the Department of Justice loan modification applications that are still eligible for the program, Bank of America and their investors have begun to gradually reduce the pool of remaining eligible loans.

To Bank of America’s credit since the onset of the Attorney General Settlement Bank of America has been very aggressive at complying with the requirements of the Attorney General Settlement, perhaps more so than any other lender.  The Department of Justice loan modification program has its pluses and minuses but overall, it has been an amazing program that has really helped many homeowners obtain loan modifications beyond their wildest dreams.  It is a little disconcerting to see that the pool of eligible borrowers is dwindling as the other loan modification programs at Bank of America, while still very helpful to borrowers are not nearly as aggressive.

What does this mean to homeowners struggling with their attempts to obtain a Department of Justice of loan modification?  It means that these homeowners should seek professional assistance as soon as possible because if their Department of Justice loan modification flag is lifted from Bank of America’s system, they could lose out on a fantastic opportunity to obtain an amazing loan modification.

Homeowners seeking a consultation on their efforts to obtain a Department of Justice loan modification from Bank of America should contact Michael Gaddis, J.D. to schedule a free consultation.  Time is of the essence because the removal of these eligibility flags is occurring at a rapid pace.  If you would like to copies of final Bank of America Department of Justice Loan Modifications obtained by Michael Gaddis please click the following links:  http://californialoanmodificationattorney.com/trials-modifications/ and http://californialoanmodificationattorney.com/trials-modifications/approved-trials-modifications-pg-2/.  To contact Michael Gaddis to schedule a free consultation please feel free to call 888-242-2272 or email Michael at Michael@frontierconsultationservices.com.  For more information about Michael Gaddis please feel free to view his website at www.californialoanmodificationattorney.com.

The Law Offices of Michael Gaddis recently obtained a final Bank of America Department of Justice loan modification for a homeowner in San Marcos, CA.  This final modification is a reward for the homeowner’s decision to stop dealing directly with Bank of America and retain Michael Gaddis’ representation.  Distressed homeowners seeking loan modifications frequently attempt to work with their lender prior to retaining professional help.  While this fact is understandable, for many homeowners, it is also unfortunate.  Homeowners frequently put too much weight into what their dedicated point of contact at the lender tells them.  What many homeowners do not realize is that their dedicated point of contact does not have specialized knowledge regarding loan modifications.  In the end, these homeowners end up frustrated and facing impending trustee sales.  This homeowner was no different.  When the homeowner contacted Michael Gaddis the homeowner was stressed out and on the verge of giving up.  However, after a free consultation with Michael Gaddis the homeowner decided to try one last time.

Michael Gaddis’ knowledge of Bank of America’s loan modification programs, policies and procedures provides homeowner’s utilizing his services a significant advantage in their pursuit of a loan modification.  For this homeowner, the result was nothing less than amazing.  The final Bank of America Department of Justice loan modification permanently forgives $462,027.18 from the homeowner’s principal balance leaving a new unpaid principal balance of $445,000.  Zillow.com estimates the current market value of the home at $526,000.  The interest rate of the final Department of Justice loan modification is 3.375% for five years followed by a fixed interest rate of 3.625% for the remainder of the term.  The initial principal, interest, taxes and insurance (“PITI”) payment of $2,629.56 is nearly $600 per month less than the PITI  payment homeowner was paying prior to becoming delinquent.  Plus, the old payment was an interest only payment while the new payment is a principal and interest payment.

As always, Michael Gaddis and his staff will continue to monitor the homeowner’s file in order to ensure that Bank of America 1) received the final Department of Justice Loan Modification paperwork; 2) properly uploaded the new Department of Justice loan modification terms; and 3) returns the homeowner’s file to regular servicing.  If you would like to see a copy of the final Bank of America Department of Justice Loan Modification referenced in this article or review other loan modifications obtained by Michael Gaddis please click the following links:  http://californialoanmodificationattorney.com/trials-modifications/ and http://californialoanmodificationattorney.com/trials-modifications/approved-trials-modifications-pg-2/.

The Law Offices of Michael Gaddis recently obtained a trial Department of Justice Loan Modification for a homeowner located in San Diego, CA.  Due to the nature and complexity of this homeowner’s income the underwriting process at Bank of America proved to be extremely challenging.  Every loan modification review, no matter what lender, has 3 basic hurdles to overcome 1) hardship 2) financial analysis (underwriting) and 3) Net Present Value (NPV).  In this case, as the homeowner had experienced an obvious serious reduction in income the hardship hurdle was not difficult at all to overcome.  However, as I mentioned, due to the complexity and nature of the homeowner’s income the real battle was in underwriting.  The homeowner’s financial situation proved difficult for the Bank of America underwriters and the underwriting process took considerably longer than a typical loan modification review.  Part of the problem was that some of the homeowner’s income came from Mexico and was in Pesos.  Although the income was stable and continuous, the underwriter had a problem converting Pesos to American Dollars.  However, eventually Michael Gaddis was able to resolve the income verification issues and the homeowner’s file was run through NPV.  The homeowner passed NPV and was issued a trial Bank of America Department of Justice Loan Modification.

The proposed trial Bank of America Department of Justice Loan Modification provides a trial payment of $1,526.00 and a proposed principal reduction of $261,609.79.  The trial payment represents an over $1,200.00 per month reduction from what the homeowner was paying prior to becoming delinquent.  The trial documentation also states that the projected initial interest rate of the homeowner’s loan modification would be around 2.75%.  The final Bank of America Department of Justice Loan Modification is contingent upon the homeowner’s successful completion of the trial period which begins on June 1, 2013.

As always, Michael Gaddis and his staff will continue to monitor the homeowner’s file in order to ensure that the final Bank of America Department of Justice Loan Modification paperwork is obtained.  If you would like to see a copy of the trial Bank of America Department of Justice Loan Modification referenced in this article or review other loan modifications obtained by Michael Gaddis please click the following links:  http://californialoanmodificationattorney.com/trials-modifications/ and http://californialoanmodificationattorney.com/trials-modifications/approved-trials-modifications-pg-2/.

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