If you've closed a loan during the run up to the housing bubble, say from 2001-2007, there's a good chance that you have problems in your mortgage documents. By problems, I mean there's likely evidence of predatory lending or violations of Truth In Lending (TILA) or the Real Estate Settlement Procedures Act (RESPA) within your documents.

I've audited quite a few loans and I've seen violations of these laws in some form in everyone's paperwork. Recently, I uncovered evidence of appraisal fraud in a client's paperwork.

Homeowners, do your homework before hiring a loan modification company. Get a loan audit before you retain an attorney or hire a loan modification company and understand your options. If you sign a loan modification agreement, you waive any claims you might have under TILA and RESPA, which might entitle you to an even better modification than you could have obtained through an loan modification company.

If you have any questions or need a loan audit, please contact me at christine@desertedgelegal.com.

Thanks,
Christine

Last week, additional details of President Obama's Mortgage Affordability program were released. There are still some additional details coming from the administration. 

I'll post additional updates when that information is available.

As I mentioned in an earlier post, there are a lot of homeowners who won't be helped by this program and we are helping quite a few homeowers with their loan modifications based on the findings of a loan audit.

A loan audit is basically a thorough review of the documents you received at closing of your home loan. We go through them to look for violations of Truth in Lending and RESPA. If your lender didn't follow the law when it disclosed finance charges, they violated the law. Their violations of law are still there regardless of whether you are behind on your home loan or not. If you have any doubt about your loan, we can perform a loan audit for you before you spend the money to hire us to represent you on the modification. 

We're not just pushing people through a loan modification system. There are many legal isses related to the chain of title (ownership) of mortgages, as well as a myriad of other issues, that should be considered when you negotiate a loan modification. You're hiring an attorney (Beth Findsen) and you will work with both of us on your loan modification.

Below are some answers to questions people ask us about whether or not they can modify their mortgages under this program.

Q.    How do I know if I qualify for the refinancing plan?

A.    Only homeowners in good standing whose loans are held by Fannie Mae or Freddie Mac qualify. The property must be owner-occupied and the borrower must have enough income to make payments on the new mortgage debt.

Borrowers cannot own more than 105 percent of their home's current value on their first mortgage. For example, if your home is worth $200,000, your first mortgage cannot exceed $210,000. Borrowers with a second mortgage still can qualify as long as their first mrotgage isn't more than 105 percent of their home's value.

Homeowners cannot take cash out during the refinance. Borrowers have until June 2010 to apply for the program.

Q.    How do I know if my mortgage is owned by Fannie Mae or Freddie Mac?

A.    Call your current lender or mortgage servicer. You can find the phone number on your monthly mortgage statement or coupon book.

You can also contact Fannie Mae at 1-800-7FANNIE and Freddie Mac at 1-800-FREDDIE from 8 a.m. to 8 p.m. EST. Or, you can go to www.fanniemae.com/homeaffordable and www.freddiemac.com/avoidforeclosure and fill out their online request forms.

Q.    Which borrowers qualify for the modification program?

A.    You don't have to be delinquent on your mortgage payments to qualify. Delinquent borrowers and current borrowers who are at risk of imminent default are both eligible.

The program applies to mortgages made on January 1 or earlier. The entire payment, including taxes, insurance and HOA dues must exceet 31 percent of the borrower's monthly gross income. It must be your primary residence. It cannot be investor owned, vacant or condemned. Home loans for single-family properties that are worth more than $759,750 don't qualify.

Eligible borrowers will have to provide their most recent tax return, and an affidavit of financial hardship to qualify for the loan modification program. In the affidavit, the applicant will need to explain the reasons for their financial woes, such as a job loss or health reasons. The government will then take steps to verify the information.

Borrowers may only have their loans modified once. The program will run through December 31, 2012.

Q.    What if I'm in bankruptcy or in active litigation over my mortgage?

A.    These issues don't necessarily keep you from qualifying for the modification program. Borrowers in active litigation can modify their loan without waiving their legal rights.

Christine's note: this will be interesting. I'm not sure how modifying a loan while in litigation can be possible without waiving your legal rights. I will ask an attorney to comment on this in a later post.

Q.    What do I do to get help?

A.    For the modification program, call your lender or mortgage servicer to see if you're eligible. For the refinance program, first find out if your mortgage is held by Fannie Mae or Freddie Mac. Then contact your lender, mortgage servicer or a mortgage broker for refinancing options.

Q.    How soon can I get help?

A.    Both the modification and refinance programs start immediately.

Q.    What if I don't qualify under this program?

A.    You have some other options. Short sale, deed in lieu of foreclosure, negotiate with the lender directly.

If you want to keep the property, call me about getting a loan audit done to look for Truth in Lending and RESPA violations. We are using the findings as leverage to obtain loan modifications for homeowners.

Feel free to e-mail me with any questions related to loan modifications.

Christine
christine@desertedgelegal.com

I have made some amazing forward movement in our loan modification efforts. I had some challenges last week which seem to have been resolved. We were both frustrated because we got hung up in some administrative nightmares at one of the lenders.

Most legal professionals are definitely Type A personalities and definitely NOT quitters because we'd have to admit defeat, and that's NOT going to happen. Legal types are some of the most competitive people you'll ever meet. We hate to lose.

Did you ever see "The Devil's Advocate?" Keanu Reeves' character has a classic line near the end when he screams angrily, "I'm a lawyer! Lawyers win!"

There were a few moments in the office that were stressful. What I noticed was that the moment I began to look for other ways to solve the problem, the dynamic of the situation shifted and the universe cleared the way for us to move forward. I was prepared to pursue a completely different course of action when the phone rang and it was a loss mitigator (instead of us calling them!) calling to let us know they were assigned to the client's file and the foreclosure would be postponed pending review and negotiation of a loan modification.

Thank goodness for small victories! It was a good week!

Christine
Christine@DesertEdgeLegal.com
Follow me on Twitter: cespringer

Well, not exactly....but now that I have your attention.....

Have you become one of the many entrepreneurs by necessity? Many people are facing some tough choices due to the employment conditions. Many have been forced to become entrepreneurs whether they wanted to be one or not.

I think many people are realizing that they need to fend for themselves and they are starting their own businesses. I've set up a record number of LLC's in the last three months.

What have you been doing to stay financially afloat? Have you started a network marketing business? Have you been a dog walker, house sitter or painter? If so, consider forming a LLC or corporation before the end of 2008.

The biggest advantage to setting up a legal entity is to shield your personal assets from liability. Whatever creative method you've been using to stay afloat financially, you probably need a legal entity to protect yourself.

I'll bet you could use a tax deduction for starting a business in 2008! Check with your tax professional for details on your specific situation.

Call me today to discuss your new legal entity and lock in the 2008 price!

Thanks for all your support in 2008!

Christine
Christine@DesertEdgeLegal.com