California Loan Modification Attorney Blog
81 Months Past DUE !!! Select Portfolio Servicing (“SPS”) Loan Modification Obtained For Homeowner in Valley Springs, CA
11/20/2014 : michaelgaddis : 10:19 am : California Loan Modification Attorney, SPS Loan Modification
SPS Loan Modification Success Story
Recently I helped a homeowner living in Valley Springs, CA obtain a HAMP trial loan modification from Select Portfolio Servicing (“SPS”). This file was one of the most difficult and frustrating cases that I have ever had. I have been assisting homeowners obtain loan modification since the inception of the housing crisis. I only mention this because I want you to understand that I am extremely familiar with not only loan modifications but also the evolution of loan modifications. When this homeowner contacted me she had been attempting to modify her loan for over 6 years and was coming off of a fresh denial from SPS. The homeowner also had a Trustee Sale scheduled to occur in 20 days. I asked the homeowner to send all of her paperwork to me and then, as I always do, thoroughly reviewed her situation to determine whether or not I thought she should be able to qualify. My first impression was that she should not be having problems. Her case appeared to be a text book example for HAMP Tier 1 approval. Yet, when I looked at the SPS denial it appeared that SPS was not even reviewing the homeowner for HAMP Tier 1. I reanalyzed the Homeowners income documentation, verified the value of the home and ran my calculations. I did this 3 times. Each time I ran my calculations I became more convinced that SPS was in error. I agreed to take the homeowners case and, although I could not guarantee a result, I told the homeowner if there was ever a case I thought should pass a HAMP Tier 1 review it was this one. The homeowner agreed to retain me and I prepared and submitted a new loan modification application to SPS for review. My first obstacle was that we the loan modification submission was too close to the sale date. I had to appeal to upper management in order to get the trustee sale postponed and the homeowner’s loan modification package into review. Once in review my work began. Sure enough the first loan modification application I submitted was denied for similar reasons to that which the homeowner received. I appealed and challenged SPS on why the homeowner’s file was not being reviewed for HAMP Tier 1. I might heavy resistance so I appealed the matter up the management chain. Months past as did the constant threat of foreclosure. Finally, I was told by SPS that the reason that the homeowner was not being reviewed for HAMP Tier 1 was because the homeowner had a received a previous Trial Payment Plan (“TPP”) and that the homeowner had defaulted after making one payment. I asked the homeowner if this was true and the homeowner told me that while she had received a TPP, she never made a payment because the approved TPP payment was too high. Hearing this I went back to SPS and told them this information. Again I met resistance. I demanded to see an accounting of her payment history so that I could see where she made a trial payment and then defaulted. Of course they could not show me where the homeowner had defaulted on a TPP. Finally, they agreed that the homeowner had not missed a TPP payment, but argued that she was still not eligible for a new HAMP Tier 1 review because the HAMP Guidelines stated that if the homeowner received a previous TPP offer and did not take it the homeowner was still not eligible for a new HAMP Tier 1 review. I could not believe what I was hearing. I told them that I was familiar with the HAMP Tier 1 Guidelines and that was not what it said. I told them that the HAMP Guidelines stated that a homeowner loses eligibility when a homeowner receives a TPP and then defaults after making the first payment. Since the homeowner did not default after making the first payment the homeowner was still eligible to be reviewed for HAMP Tier 1. The response I received from SPS made me laugh out loud. SPS responded by telling me that the while what I was saying was true for the current HAMP Guidelines, the HAMP Guidelines in effect at the time were consistent with their position and the homeowner was still not eligible because she had received a TPP but never made a payment. I laughed because the newest HAMP Guidelines Handbook clearly states that each new version of the HAMP Guidelines supersedes the previous version. In this case, the new HAMP Guidelines trumped the old HAMP Guidelines thus allowing the homeowner to be reviewed for HAMP Tier 1 again. I actually cut and pasted excerpts from the Treasury Guidelines to support my position. SPS clearly was wrong for not reviewing the homeowner again for HAMP Tier 1 and finally, they reluctantly agreed to rerun her for HAMP Tier 1. Subsequent to their agreeing to rerun the homeowner for HAMP Tier 1 I received another denial from SPS. When I reviewed the denial I noticed that SPS was still not reviewing the homeowner for HAMP Tier 1. I challenged SPS again. SPS told me that they were having trouble removing a block in their computer and that they would need to figure out how to lift the block in order to rerun the homeowner’s file for HAMP Tier 1. About a month later, I was finally informed that SPS was able to properly run a HAMP Tier 1 review and that the homeowner had passed and been issued a TPP.
This file was definitely one of the more challenging files because lenders always believe that they are right and that homeowners are wrong. SPS believed that they had properly followed HAMP Guidelines and that they were 100% correct in their review of the homeowner’s file. As you can see, they were wrong. The TPP plan calls for a payment of $2,218.75 which represents a potential savings of nearly $700 a month from the homeowner’s currently scheduled payment. The trial payment begins December 1, 2014.
Michael Gaddis is very proud of every one of the modifications that he obtains for homeowners. This loan modification means that yet another family will be able to keep their home. 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 SPS loan modification is obtained. To view a copy of this trial SPS 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/
11/19/2014 : michaelgaddis : 10:42 am : California Loan Modification Attorney
I have been assisting distressed homeowners either 1) modify their loans; 2) short sell their home; 3) obtain short refinances; or 4) obtain deed-in-lieu since 2008. One would think that by now, most of the companies preying on desperate homeowners would have either disappeared by now or would have been shut down via the legal process. Yet, every single day I receive a phone call from someone telling me that this company or that company took their money or promised them pie in the sky. While I appreciate the fact that homeowners are desperate to keep their homes, I also feel that these same homeowners should not allow themselves to be victimized or lured into an uncomfortable situation by promises of leprechauns and unicorns. I think over the past 6+ years I have heard stories about every scam or false inducement scheme out there. I really feel sorry for homeowners who are not only losing their home but also spending their life savings trying to save it.
If you have friends, family, coworkers or acquaintances that are losing their home and want to give them some advice, I would suggest telling them the following:
1. The bank is not there to “help” them. Banks represent investors. Investors desire to make money. The only reason that investors consider loss mitigation tactics such as loan modifications, short sales, deed-in-lieus, etc. is because the investor is in danger of losing money. Banks do not give loan modifications because they feel sorry for home owners, they give loan modifications because giving loan modifications is in the best financial interests of their investors. The term “Loss Mitigation” by definition means making the best of a bad situation. Banks “evaluate” homeowners to see if they can offer changes to the existing terms of the note that are favorable to, who else, the investor.
2. If you or a homeowner want solid advice on how to resolve a delinquent loan situation, seek out an attorney that has experience in dealing with the banks. Preferably, find an attorney that is also a mortgage broker and real estate broker. The 3 skill sets of an attorney, mortgage broker and real estate broker are perfect for helping distressed homeowners. If you contact an attorneys office or a “legal center” insist on talking to an attorney. Do not be sold until you have the opportunity to speak to the attorney. You have no idea how many times I have been told that a homeowner thinks they were working with a law office but were never allowed to speak or see an attorney. This should send up giant red flags.
3. Watch out for investors. Investor will frequently approach homeowners in sheep’s clothing promising to help save homeowners. However, typically the real motivation is to try and find a way to get you to work with them so that they can acquire your property below market value. These investors will frequently tell you that they will try and help you obtain a loan modification, for free! They know that you do not have a chance but they feel if they earn your trust they will be able to turn you to do what they want you to do once your loan modification application is denied. Or that they will buy the house and let you stay there and eventually buy it back. Their real motivation is their own pecuniary gain.
4. Do not pay up front for loan modification services. Never pay a dime for loan modification services, no matter what they call it, until they have achieved their goal. In California, SB-94 prohibits the taking of up front fees for loan modification services. If someone tries to charge you up front run away, fast. Not even attorneys can take up front fees.
5. Be Realistic. Many homeowners have unrealistic expectations about what can be done to resolve their delinquent loan situation. These homeowners here “stories” about what other homeowners are receiving and want to obtain the same thing for themselves. Homeowners need to keep 2 things in mind: 1) Not all of these “stories” are true; and 2) Every homeowners situation is completely different. The second point is probably the most important to keep in mind. Every single situation is unique. Each homeowner may have: 1) a different loan servicer; 2) a different investor (while the loan servicer might be the same, the investor who owns the underlying note may be different; 3) different income and income sources; 3) different loan-to-value (“LTV”); 4) different amounts of delinquency; 5) different loan terms (interest-only, principal and interest, negative amortization, etc.); and 6) and so and so on…
The point I am trying to make is that modifying a loan is difficult. Homeowners are fighting investors’ financial incentives of granting loan modifications. I strongly suggest obtaining competent professional assistance. As real estate prices continue to rise and the risk of loss to investors decreases the incentive for granting loan modifications decreases. Do not put yourself into a position where you have exhausted too much time. If you need help seek it out sooner rather than later.
If you or someone you know is in need of a loan modification please contact me at 760-692-5950 or by email at Michael@lawofficesofmg.com. I offer free consultations and the promise that I will tell you the truth, not just what you want to hear.
09/19/2014 : michaelgaddis : 4:08 pm : California Loan Modification Attorney
While many economist and housing analysts believe that the housing crisis is now behind us, I am not so sure that this is the case. I would agree that the majority of first-time defaults have already occurred, however, I fear that the methodology utilized by lenders in the restructuring of defaulted loans, the increase in property tax and the maturity of junior liens could cause a second housing crisis. I have already started to see it happen. As I see it, this “Second Housing Crisis” might be stimulated by anyone or combination of the following factors:
Interest-Only to Fully Amortized Loans
In the early days of loan modifications lenders thought that the best way to deal with delinquent borrowers was to capitalize past due payments and then modify borrowers into low interest-only loans for a fixed period of time that would convert into a fixed rate principal and interest payment. I call this the “Band-Aide” solution. While these types of loan modifications provided temporary relief to homeowners, they did not fix the long term problem. For example, a homeowner had a new principal balance (after capitalizing past due amounts) of $500,000 and a remaining term of 23 years. If the borrower’s lender offered him a loan modification with 5 year interest-only that converted into a 5% fixed upon the expiration of the interest-only period the borrowers initial new interest-only payment would be $1,458 per month. The $1,458 payment is super low and most borrowers would be more than happy to make that payment. However, at the end of the 5 year period, the payment would convert into an 18 year principal and interest payment with a new payment of $3,515.17 per month. In other words, the borrowers payment would increase by over $2,000.00 per month! So as more and more of these Band-Aide loan modifications convert into principal and interest loans the re-default rate will increase substantially.
Junior Liens & HELOCs
Since the beginning of the housing crisis most homeowners just stopped paying on their junior liens and HELOCS. The theory was that since the value of their home decreased to the point that the junior liens and HELOCS were complete out of position there was no need to pay on them or deal with them because if push came to shove, these junior liens and HELOCs would not foreclose. For the most part, these borrowers were correct. Although junior liens and HELOCS could, in theory, foreclose, it did not make good business sense. In California, a lien holder can foreclose or pursue a deficiency judgment, but not both. So if the junior lien foreclosed they lost the right to pursue a deficiency judgment AND, the they were out of position, they were at the mercy of the 1st lien holder as to whether they would be able to recover anything at all. In most cases the junior liens and HELOCs decided to sit back and wait it out hoping for 1) property values to increase to put them into a better position; or 2) the borrower to initiate either a settlement request or short sale; or 3) an investor to come along that was willing to pay them a reasonable amount for the note. As property values rise the position of these junior lien holders and HELOCs strengthens. With a strengthened position these same junior liens and HELOCs have begun pushing back and now the threat of foreclosure is real is to homeowners. In some cases, homeowners who have modified their first loan and are delinquent on their seconds have been foreclosed on even though they are current with their first lien holder. Many of these homeowners disregarded the warnings and did not believe the threats regarding foreclosure from the junior lien holders were real. They were real and, as a result, they lost their house. Sooner or later these “forgotten” junior liens and HELOCs need to be dealt with or more and more homeowners will be pushed into foreclosure.
Ballooning & Converting HELOCs
Junior liens and HELOCs present a potential problem even for homeowners that remained current during the housing crisis. First, many junior liens and HELOCs were interest-only for a period of time, usually 10 years, that convert to principal and interest. So, like the Band Aide loan modifications above, they represent a potential drastic increase in housing expense to homeowners. Homeowners that are living on a fixed income might not be able to absorb the increase from these converting junior liens and HELOCs which will be converting, like the Band Aide loan modifications mentioned above, into a principal and interest loans on short amortization periods. Another huge problem is that some of these junior liens are ballooning. A balloon is when the repayment term expires without the principal balance being paid off in its entirety leaving a very large balance that needs to be paid. These balloons are causing many homeowners headaches that could eventually force them into foreclosure.
Increasing Property Taxes
As values rise so do property taxes. Many homeowners that have received loan modifications were forced to “escrow” their taxes and insurances into their payments. Rising property taxes will force lenders to increase their escrow payments resulting in higher payments to homeowners. These escalations are causing problems for homeowners, especially homeowners in higher value properties where the value swing has been substantial resulting in large increases to property taxes. Homeowners unprepared for the increased monthly obligation could be in trouble.
Beginning at the end of 2009 many homeowners received step-rate loan modifications. Step-rate loan modifications are fixed loan modifications that have an initial interest rate below the permanent fixed rate. For example, a loan modification might have an initial interest rate of 2% set for 5 years followed by 3% in year 6, 4% in year 7 and fixing permanently at 4.75% in year 8. This means that starting in year 6 the principal and interest payment will start increasing every year until the maximum interest rate is reached. Many homeowners really liked the initial 2% interest rate but felt that the increased payments might be too much for them to handle. As these step-rate modifications increase homeowners, especially those that are still severely under water, will begin to redefault. The problem for these homeowners is that obtaining a new loan modification, although not impossible, will be extremely difficult.
All of these factors could lead to another wave of massive defaults. Many homeowners are still living on a very slim budget and increases to their housing expenses, even ever so slight ones, could be catastrophic for them.
06/17/2014 : michaelgaddis : 6:14 pm : California Loan Modification Attorney, Nationstar
Nationstar Loan Modification Success!
Miracles never cease to happen, at least at The Law Offices of Michael Gaddis. Over two-and-a-half years ago a homeowner made an appointment with Michael Gaddis for a consultation regarding his chances at obtaining a loan modification at Bank of America. At the time, Michael Gaddis was very skeptical because 1) the homeowner’s income appeared to be too high and 2) the homeowner’s loan-to-value (“LTV”) appeared to be around 100% or lower. In other words, the homeowner did not have a “cookie-cutter” scenario. Based on a thorough review of the situation Michael Gaddis agreed to take the homeowner’s case but told him that it would not be easy and that his chances of success were, at best, 60%. As the homeowner had already tried to modify his loan numerous times prior to consulting with Michael Gaddis, the homeowner was convinced that using Michael Gaddis was his best chance at obtaining a loan modification. Michael Gaddis took the homeowner’s case thus starting a very lengthy roller coaster ride. During the two-and-a-half years that Michael Gaddis worked on the homeowner’s loan modification the homeowner lost his job, then got a new job, then lost that job and then got a new job. This constant change in income was an underwriting nightmare that gave Bank of America, and Michael Gaddis for that matter, fits. Just when the homeowner’s financial situation stabilized the servicing of the loan was transferred from Bank of America to Nationstar. Meanwhile, the San Diego real estate market began to rebound resulting in an increase to the homeowner’s property value. As you are probably aware increases in property value mean less risk of loss to the investor which means less incentive for the investor to approve loan modifications. Everything seemed to be working against the homeowner and Michael Gaddis. However, Michael Gaddis continued fighting for the loan modification.
Finally, two-and-a-half years after the homeowner first consulted with Michael Gaddis Nationstar issued a Home Affordable Modification Program (“HAMP”) trial loan modification. The trial amount of $2,627 per month reflected a potential payment savings of over $1,300 per month PITI. Incredible to say the least. Michael Gaddis literally willed this loan modification into existence through his zealous persistence and tenacity.
Michael Gaddis is very proud of every one of the modifications that he obtains for homeowners. However, loan modifications like this one hold a special place in his heart. This loan modification means that yet another family will be able to keep their home. Michael Gaddis especially appreciates his Nationstar loan modification success stories because Nationstar can be a difficult lender to deal with. 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 Nationstar loan modification is obtained. To view a copy of this trial Nationstar 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/
06/12/2014 : michaelgaddis : 9:27 am : California Loan Modification Attorney, SPS Loan Modification
I have been helping people modify their loans since 2008. During that time I have helped countless homeowners keep their homes by fighting lenders for loan modifications. Until yesterday, the latest loan that I had ever modified was 75 months past due. That’s right, 75 months or 6 years 3 months! I was extremely proud of that accomplishment because as loans get more and more behind they become more difficult to modify. I thought 75 months was a record that would never be topped. However, yesterday I was able to obtain a trial loan modification from Select Portfolio Servicing (“SPS”) for a homeowner in Poway, CA that was 88 months past due. That is not a typo. The homeowner was 88 months or 7 years and 4 months past due!!! Although I was fairly certain that the loan was modifiable I was concerned because the homeowner was behind $513,790.89. Due to the number of months past due and the significant amount of arrearage I anticipated problems with Net Present Value (“NPV”). However, the NPV results came back favorably and SPS issued a trial loan modification with a first trial payment due date of July 1, 2014.
Some people will say that it is unfair that this homeowner got to stay in her house for over 7 years without a payment and now gets to keep her house with a loan modification. I can assure you that although the homeowner did not make a payment for over 7 years it was not a party. This particular homeowner had been battling the lenders since day 1 trying to obtain a loan modification. She had tried numerous times on her own, with other attorneys, nonprofit agencies, etc. This homeowner tried everything in the book to save her house. She lived in her house for 7 years not knowing what was going to happen. Every morning she stressed that someone would knock on the door and kick her out. She just wanted to make her house payment but IndyMac refused. Instead of giving up and losing hope, she continued to fight. The fight consumed her and took its toll on her relationships and her work. Finally, she found my website and approached me to see if I thought there was any way that I could save her home. She had read all of the stories on my website about the various obstacles that I had overcome over the years and thought I would be a great person to consult with. This particular homeowner exhausted and needed to know if there was any realistic possibility of obtaining a loan modification. The fight was finally wearing her down.
I reviewed her situation and identified possible areas that had been causing her problems in the past. Although I knew that there were significant issues that could cause problems with NPV I thought she had a greater than 50% chance of success. I told her that I would take a shot and see if I could help her.
In the end, this homeowner’s situation became another Michael Gaddis SPS loan modification success story, albeit one that I am extremely proud of. If you would like to see my “trophy case” please click on the following links and view copies of trials and modifications that I have obtained over the years. Although they are not all on there, I think you will get the idea of what I am capable of: http://californialoanmodificationattorney.com/trials-modifications/ and http://californialoanmodificationattorney.com/trials-modifications/approved-trials-modifications-pg-2/
06/10/2014 : michaelgaddis : 12:47 pm : California Loan Modification Attorney
The best piece of advice that I can give homeowners desiring loan modification help is not to wait until the last minute to seek competent assistance. Notice that I emphasized the word “competent”. The problem with most homeowners in distress is that they are so desperate to save their home that they are willing to listen to offers for assistance that promise results that are unachievable. There are loan modification companies out there that work on volume. These companies try to sign up as many homeowners as they can hoping that at least 50% of them stick. I give consultations all of the time and I am frequently told, “Well, ABC Company says that they can do it” or “ABC Company promised me a 2% on a 40 year amortization and a principal reduction”. The bottom line is I can promise you a leprechaun but I will never be able to deliver it. I equivocate my conversations to those a doctor has with his patients. Sometimes I have to deliver bad news and no matter how much the homeowner does not want to hear it, I have to be truthful. Trust me, not everyone wants to hear the truth, but I feel that it is best for homeowners to know their odds. If a homeowner calls me that does not have a job, has hundreds of thousands dollars of equity and already has a HAMP Tier 1 with a 2% amortized over 40 years with a principal deferment, the prognosis is not good. Yet, homeowners with this scenario are being told “No worries.” My business is not based on volume, it is based on identifying the best possible candidates and fighting for these candidates.
The reason I am saying to not wait until the last minute is because too many people wait until the last minute or chase leprechauns before seeking a real 2nd opinion. I wish that I could tell every single person that calls me good news, but with rising property values and stricter investor loan modification guidelines it is getting tougher. The sooner that a homeowner contacts me the better. Loan modifications are difficult and it takes time to prepare for the submission. Homeowners that contact me after attempting to obtain a loan modification with companies that promise pie in the sky risk having the lender use whatever that company does on their behalf against them. Not to mention the fact that these homeowners could press their luck and be facing a Trustee Sale by the time they eventually contact me. Trustee Sales are much more difficult to stop than they used to be. While I still have a very good track record of stopping sales, without the need for a bankruptcy or other silly tactic, I do not like to call in favors with the lenders unless it is absolutely necessary. I cannot abuse my abilities, especially for situations that are preventable.
Homeowners that are trying to stay in their houses for as long as possible without making a payment also might press their luck. Some homeowners want a loan modification, but also want to continue living in their house for as long as possible without making a payment. These homeowners risk pushing the envelope too far. Programs are constantly changing (and not necessarily for the better) and property values continue to rise. The more that a homeowner pushes his/her luck the greater chance that the variables could change against them.
Another reason that is important to seek loan modification assistance sooner rather than later is because sometimes windows of opportunity arise that make obtaining a loan modification easier. Identifying when these windows will arise is crucial.
Proper planning for a loan modification submission is also extremely important. As I have mentioned time and time again, the banks (lenders/servicers) are not your friends. They are a financial institution (not a non-profit agency). If you are fighting for your house you need an ally on your side that knows how they work and what they are looking for. Without such a guide homeowners are at the mercy of these giant financial entities.
In conclusion, my advice is 1) Don’t Lose Hope; 2) Don’t wait until the last possible minute before seeking competent advice; and 3) Leprechauns are not real, so don’t chase them!
05/27/2014 : michaelgaddis : 11:29 am : California Loan Modification Attorney
Michael Gaddis of The Law Offices of Michael Gaddis recently appeared on a San Diego morning television show in order to discuss the state of loan modifications in 2014. Heather Myers of CW6′s San Diego Living conducted the interview and asked Michael Gaddis numerous questions related to loan modifications. Michael Gaddis is an accomplished loan modification attorney. He has assisted homeowners in their attempts to obtain loan modifications with their lenders since 2008. Michael Gaddis is not only a licensed California attorney but also a real estate broker and NMLS licensed mortgage broker. This rare combination of knowledge and skills provide Michael Gaddis with a unique perspective and allows Michael Gaddis the ability to communicate with lenders/servicers in their own ”language”. Michael Gaddis spends a lot of time evaluating prospective clients before agreeing to take their case. The simple truth is that not everyone will qualify or be able to obtain a loan modification. For one reason or another, a loan modification might be out of reach. By eliminating scenarios that have little or no chance of success it allows Michael Gaddis to concentrate his efforts on those clients that have a real probability of success. Michael Gaddis also has to seriously gauge a p0tential client’s expectations. If a potential client’s expectations are unrealistic or outside the parameters of a probable outcome then Michael Gaddis will not take the case. Michael Gaddis only takes clients that have a realistic expectations and a high probability of success. Many potential clients are surprised at how thorough Michael Gaddis reviews their situation prior to agreeing to take their case. “I do tend to spend a lot of time with homeowners seeking assistance on their loan modifications,” said Michael Gaddis, “However, I have to take a lot of time because there are so many factors that determine whether or not I will be able to help.”
Michael Gaddis does not take any upfront fees and does not collect fees until he has successfully obtained either a trial loan modification or final loan modification, whichever comes first. California law SB-94 and the California State Bar’s interpretation of SB-94 prevent any entity, lawyer or otherwise, from taking any upfront fee when working on loan modifications. Michael Gaddis has no problem with SB-94 but it does make him more cautious about which homeowners he agrees to help. Homeowners with situations having a 50% probability of success or lower, as determined by Michael Gaddis, are not good candidates for assistance. However, even those homeowners not accepted as clients will learn a lot more about their specific loan modification situation after taking advantage of the free consultation offered by Michael Gaddis. “There are still a lot of people out there fighting for loan modifications,” said Michael Gaddis, “There is so much misinformation that I feel the need to really let people know what they are up against, whether or not they become my clients.”
Michael Gaddis warns against using loan modification companies or lawyers that do not thoroughly review a homeowners situation. If a homeowner calls a loan modification attorney the homeowner should demand to speak to that attorney prior to agreeing to anything. If the homeowner is not able to speak directly to the attorney that will be handling their case then Michael Gaddis suggests continue searching. Likewise, if a loan modification company spends more time telling a homeowner how the homeowner will pay rather than reviewing the homeowner’s file, that should be a warning. Finally, beware of loan modification companies or loan modification attorneys that trivialize the difficulties of obtaining a loan modification. Loan Modifications are difficult to obtain. “If a loan modification company or loan modification attorney appear to be telling you exactly what you want to hear you might want to get a second opinion,” warned Michael Gaddis. “I do not believe in leprechauns or unicorns and neither should homeowners. Homeowners deserve to hear the truth, even if it hurts.”
To view a copies of 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/
05/20/2014 : michaelgaddis : 6:58 pm : California Loan Modification Attorney, Nationstar
The Law Offices of Michael Gaddis recently obtained a final Nationstar Loan Modification for a homeowner located in San Diego, CA. This Nationstar Loan Modification took over two (2) years to obtain. Why did it take so long? First, the original servicer of the loan was Bank of America. Bank of America literally drug the underwriting on this file on for as long as they possibly could. Just when Michael Gaddis began making headway with Bank of America he was notified that the file was marked for service release. Whenever a file is service released to a new loan servicer the loan modification process is delayed, sometimes by months. Second, the borrower’s financial situation changed three (3) times during the course of the loan modification process. The changes were major swings in the borrowers net and gross income. These significant changes affected underwriting and forced delays. The last reason that obtaining the final Nationstar Loan Modification was delayed was because Michael Gaddis had to challenge two (2) sets of NPV failures. Appealing NPV failures takes time.
The borrower was persistent and wanted to fight to the end. Michael Gaddis was up for the task and continued to challenge Nationstar until, finally, Nationstar issued a trial loan modification. The borrower completed the necessary three (3) trial payments and Nationstar subsequently issued the final loan modification paperwork.
The long, seemingly never ending, fight paid off in the end for the borrower. The terms of the new loan modification are amazing. The new principal, interest, taxes and insurance (“PITI”) payment of $2,627.54 is over $1,300 lower per month than what the borrower was paying prior to becoming delinquent. The Nationstar loan modification is a step-rate loan modification starting with a 2% for the first five (5) years of the loan followed by 3% in year (6), 4% in year seven and fixed thereafter at 4.375%. Nationstar also increased the amortization period and maturity date to forty (40) years.
There were several times during the process where things did not look so promising. However, through the team work of the borrower and Michael Gaddis persistence and determination paid off. This particular case is one that Michael Gaddis is particularly proud of. Saving people’s homes provides Michael Gaddis with a great sense of pride and accomplishment. By never giving up, Michael Gaddis made a difference for a family in San Diego.
As always Michael Gaddis and his staff will continue to monitor the homeowners’ file in order to ensure that Nationstar receives the executed final loan modification documents; that the terms of the Nationstar loan modification are properly uploaded into Nationstar’s system; and that US Bank returns the homeowners’ file to regular servicing. To view a copy of the Nationstar loan modification referenced in this blog as well as 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/
05/19/2014 : michaelgaddis : 2:00 pm : California Loan Modification Attorney
Over the years I have worked with nearly every Lender/Loan Servicer. Below is a list of the more common Lenders/Loan Servicers and my general thoughts about working with each of them. The comments below are my opinions and nothing more than that.
Bank of America: As a result of enormous service releases, Bank of America’s loan servicing portfolio has shrunk dramatically over the past year and a half. At one time, the majority of all homeowners that contacted me for assistance had Bank of America. Since I have been assisting homeowners since 2008 with loan modifications I have established very solid relationships within Bank of America. I have better contacts and resources within Bank of America than any other Lender/Servicer. With that being said, the bulk of the remainder of the loans that Bank of America continues to service are owned by Bank of America. Bank of America serviced and OWNED loans are the most difficult to modify at Bank of America. I know as much about Bank of America’s loan modification processes and procedures as nearly anyone in the country. I am so confident in my ability that I tell people “No one in the state of California that has Bank of America as their loan servicer should lose their home without contacting me first.”
Wells Fargo: In my opinion Wells Fargo is the most difficult of all Lenders/Loan Servicers. With that being said, it is important to know whether Wells Fargo loan originated with Wells Fargo or with Wachovia/World Savings. The Wachovia/World Savings originated loans are portfolio loans of Wells Fargo and these loans are much easier than the Wells Fargo originated loans. My opinion of Wells Fargo is based upon years of working with their loan modification underwriting policies and procedures. Based upon my experience, Wells Fargo makes everything more difficult than it needs to be. Loan modification reviews at Wells Fargo can take a considerable amount of time. Patience is the key to working with Wells Fargo. With that being said, I am more proud of my successes with Wells Fargo than with any other Lender/Servicer.
CitiMortgage: CitiMortgage is, next to Wells Fargo, one of the most difficult Lenders/Servicers to work with. For some reason, CitiMortgage loan modification underwriters seem to review loan modification applications with magnifying glasses. Sometimes I feel like they are trying every way possible to find a reason to deny a loan modification application. Reviews at CitiMortgage, like Wells Fargo, take a lot of time. Persistence is the key with CitiMortgage. Additionally, if you want to obtain a loan modification from CitiMortgage you better know how loan modifications work and be prepared to fight them to properly enforce their own guidelines, policies and procedures.
Chase: In my opinion, Chase used to be the worst Lender/Loan Servicer on the planet (a spot now held by Wells Fargo). Over the years Chase seems to have gotten their act together to the point where I actually like working with them. One thing you can count on with a Chase loan modification application is that the review will take a LONG time. Patience and persistence is crucial with Chase. In my experience, self-employed borrowers have a terrible time trying to obtain loan modifications from Chase. There is a myriad of reasons why self-employed borrowers have a more difficult time at Chase than W-2 wage earners. If you are self-employed and Chase is your lender then you really need to know what you are doing if you want to have any chance of success.
Select Portfolio Servicing, Inc. (“SPS”): SPS been around for a while but their servicing portfolio has grown in the past couple of years due to the fact that they have inherited a lot of loans from Bank of America. SPS is another one of those Lenders/Servicers that I actually like to work with. I have a pretty good command of their policies and procedures. Over the years I have also established some pretty good relationships at SPS. In my opinion, SPS is one of the better Lenders/Loan Servicers to work with.
Ocwen: Ocwen is an interesting Lender/Loan Servicer. Like SPS they have grown throughout this housing crisis by inheriting large pools of loans from the likes of Litton Loan Servicing and Bank of America. When people contact me about Ocwen they are usually very frustrated, especially with having to deal with Ocwen’s outsourced call center located in India. People are surprised when I tell them how much I like working with Ocwen. In my opinion, Ocwen is one of the best Lenders/Loan Servicers to work with on loan modification applications. Ocwen, typically utilizes HAMP Tier 1 & Tier 2 for eligible loans and, if that fails, reviews the borrower for their in-house loan modification program. Ocwen’s in-house loan modification program is one of the best, if not the best, internal loan modification of any servicer. If I needed to modify my loan I would hope that Ocwen was my Lender/Servicer.
Bayview: Bayview is a smaller Lender/Loan Servicer that has also grown recently due to inheriting loans from Bank of America. Bayview has very difficult loan modification underwriting procedures. Bayview is one of those Lenders/Loan Servicers that you have really got to know your stuff in order to be successful. I have had a lot of success working with Bayview but they are one of those Lenders/Loan Servicers that you have to babysit and stay on top of. It is also very important to be prepared to challenge negative results at Bayview. The loan modification process at Bayview might also take a lot of time. Patience, persistence and knowledge are the keys to success at Bayview.
Specialized Loan Servicing, LLC (SLS): My experience with SLS has been very positive. SLS is extremely responsive and quick to review any file that I challenge. SLS has come through for me several times when needed. I would not say that they are the best Lender/Loan Servicer but I would also not say that they are the worst. SLS is one of those Lenders/Loan Servicers where the correct result usually is obtainable.
Carrington Mortgage Services, LLC (“Carrington”): Carrington is one of those Lenders/Loan Servicers that has an unjustified bad reputation. In my opinion Carrington is one of the most responsive Lenders/Loan Servicers. Carrington is very quick to address any challenge that I have pertaining to NPV failure or underwriting. I have established very good relationships at Carrington and found the people that work there to be knowledgeable. I like working with Carrington.
Nationstar: Nationstar is another Servicer that has grown significantly over the past few years. Nationstar inherited large pools of loans from Bank of America. Even prior to the servicing transfers from Bank of America, Nationstar was one of my favorite Lenders/Loan Servicers to work with. Nationstar is another one of those Lenders/Loan Servicers that I have established a good working relationship with. I know how to navigate through Nationstar in order to ensure that a loan modification application is given a proper and thorough review. Along with Ocwen, Nationstar is my favorite Lender/Loan Servicer to work with on loan modifications.
One West Bank/ Indymac: Indymac is another one of those Lenders/Servicers with a terrible reputation. However, my experience with Indymac has been mostly positive. What I like most about Indymac is their predictability. Indymac underwriters are usually very thorough, knowledgeable and much quicker than other lenders. Indymac underwriters know their investor guidelines and follow these guidelines better than any other lender. Unfortunately, Indymac recently released servicing on many loans retaining mainly the loans owned directly by One West Bank/Indymac. I say “unfortunately” because I like working with IndyMac.
Residential Credit Solutions, Inc. (“RCS”): RCS is an enigmatic Lender/Servicer. For some cases, RCS is very efficient and easy to work with, on others, RCS is extremely difficult and obstinate. I never know what I am going to get at RCS. The key to success with RCS is determination.
Shellpoint Mortgage Servicing (“Shellpoint”): Shellpoint is a Lender/Loan Servicer that has grown recently due to acquisitions. On May 1, 2014 Shellpoint took over servicing of Resurgent Mortgage Servicing. I have not yet formed an opinion on Shellpoint. The jury is still out.
PNC: PNC is a Lender/Loan Servicer that I like to work with; however, my experience has indicated that PNC does not have the best investor guidelines. I am very cautious about setting up expectations when discussing potential outcomes with borrowers having PNC.
America’s Servicing Company (“ASC”): ASC is basically Wells Fargo. All of the things that I said about Wells Fargo apply to ASC. With that being said, I literally just met with a client and went over her final ASC loan modification paperwork. ASC did a great job on her loan modification using an interest rate reduction, a principal deferment and a maturity date extension to achieve a great result.
PHH Mortgage: My experience with PHH is somewhat like RCS. The problem with PHH is that many of the investors that they service loans for do not participate in HAMP. I am a fan of HAMP and I have found that investors that do not participate in HAMP typically have more difficult loan modification underwriting requirements.
Green Tree Servicing: Green Tree is another enigmatic Lender/Loan Servicer. While Green Tree does service first trust deeds they are more known for servicing second trust deeds. I have had a lot of success obtaining loan modifications for both their first and second trust deeds. They are very responsive and, overall, a decent Lender/Loan Servicer.
05/14/2014 : michaelgaddis : 3:17 pm : California Loan Modification Attorney
I have been assisting homeowners in their efforts to obtain loan modifications since 2008. One would think that after nearly 6 years there would no longer be a need for loan modifications, that most or all of the homeowners that were suffering would have either obtained a loan modification, short sold their house or been foreclosed on by now. However, I assure you that there are still a significant amount of homeowners still searching for an answer. Most of the homeowners still searching for a solution fall into one of 3 categories.
The first category consists of homeowners that received loan modifications before. Most of these homeowners received loan modifications during the early years of the housing crisis. There are many reasons why a homeowner that received a previous modification would redefault. One common reason is that many of these early loan modifications were band-aide fixes usually with 3.5% interest only payments fixed for five (5) years that converted back to the terms of the original note after the expiration of the five (5) year period. These modifications were temporary fixes geared toward getting homeowners caught up and paying again. The problem is that at these homeowners are facing an “iceberg” looming out there for them. When the note converts to the original terms of the note there will come a time when the note will no longer allow interest only payments but will require principal and interest payments. When this happens the homeowners payment will be amortized based on the remaining life of the loan. So if the note is a thirty (30) year note and it converts to principal and interest after ten (10) years the outstanding principal balance will amortized over twenty (20) years. To illustrate, if you have a $500,000 principal balance and a 3.5% interest rate your interest-only payment would be $1,458 per month. When your loan converts to principal and interest at 3.5% with 20 years remaining on the note your new payment would be $2,899 per month resulting in an over $1,400 a month increase from the interest-only payment. As you can see, such a substantial increase could be disastrous to a homeowner. Another reason is that lenders used to send out automatic modifications that basically recapitalized the outstanding balance and reinstated the loan terms with a higher payment than the homeowner had previously. Many homeowners agreed to these types of modifications because they were scared that this might be the only modification that they could obtain. They accepted the terms knowing that it would be extremely difficult to maintain. Many, many of these homeowners ended up redefaulting. Another reason homeowners redefault is because their financial situation deteriorated post modification. Simply put, they just were not making enough money to sustain the modified payment, whatever it was.
The second category of homeowners that are still struggling with loan modifications are self-employed homeowners. Self-employed homeowners struggle because determining what their true income is can be tricky. Lenders thoroughly scrutinize self-employed borrowers’ financial situation. Lenders look at profit and loss statements, tax returns, bank statements, etc. Sometimes Lenders will literally look at profit and loss statements line by line in an effort to find a miscategorization resulting in more income to the borrower. Likewise, bank statements and tax returns are reviewed and reviewed and reviewed. As a result it is not unusual for a self-employed borrower to become severely delinquent. Self-employed homeowners that contact me are frequently anywhere from twenty-four (24) to forty (40) months behind. I know that sounds crazy but these homeowners are not trying to best the system by staying in their houses for as long as they can without paying, they are stressed out and fighting for their homes. They would rather be paying than living day-to-day and dealing with the Lenders which, sometimes, overtakes their lives. Fighting the Lenders can become a full-time job. Between phone calls, waiting on hold, faxing documents and following up, hours can pass each day. Some homeowners become consumed with the fight to the detriment of their family, relationships, job and health.
The third category consists of homeowners that are attempting to modify non-owner occupied properties. Non-owner occupied properties, usually rental properties, are typically more difficult to modify than owner-occupied properties. Loan modifications pertaining to non-owner occupied properties normally have a different set of underwriting guidelines than owner occupied properties. These guidelines usually do not provide modification terms as favorable as owner occupied properties. The HAMP program is an example of this. Non-owner occupied properties are not eligible for HAMP Tier 1 modification reviews. Instead, non-owner occupied properties are run through HAMP Tier 2. While HAMP Tier 2 can be beneficial to some homeowners HAMP Tier 2 is not nearly as aggressive as HAMP Tier 1. HAMP Tier 2 requires an analysis based on the capitalized principal balance amortized over forty (40) years with an interest rate based on the current 30 year Freddie MAC rate which as of the date of this article is 4.21%.
Loan modifications are tough to get. They are even difficult for me and I am as close to an expert as you can get. They take knowledge, perseverance, tenacity and determination. Most of all, at this point in the game, you have to understand the Lenders and what they are looking for. If you are a homeowner and are still struggling with your Lender you need to get help. Increasing values are negatively affecting homeowners’ odds of obtaining loan modifications. You need to locate someone who has the knowledge and ability and passion to fight for you. At this point, if saving your home is a priority, do yourself a favor and quit trying to do it on your own. If you have not been successful after 24 or 36 months it is time to get some help.