About Jillayne Schlicke

Educator in the field of mortgage lending and real estate. Follow me on Google+

The Pass Rate of the New National Loan Originator Exam is 67%. Who is/isn’t passing?

Posted on May 3, 2010 by Jillayne Schlicke

I’ve had a chance to meet many loan originators during the past 5 months while teaching the required 20 Hour SAFE Comprehensive Pre-licensing and Exam Prep Course.

Currently, loan originators in WA State who have not been previously licensed are going through the licensing and testing phase which includes the required 20 Hour Course, mandated by the Federal SAFE Act (Secure and Fair Enforcement) Act of 2008.

I have some feedback for folks who are looking at the pass rates of the new national exam (currently 67%) and wondering who is passing and who is not passing the exam. But first some background.

Prior to 2010, loan originators working under a mortgage broker in some states had to become licensed and pass state exams by scoring at least 70%. State exam included state law, federal law, mortgage-related mathematical computations and a few questions on ethics. At the end of 2007 WA State had roughly 14,000 licensed LOs. In 2008 there was a WA state law change in which the definition of the word “lender

Regulators: Mortgage Lead Generation Firms are Violating State and Federal Laws

Posted on April 14, 2010 by Jillayne Schlicke

So here we go again. Now that mortgage rates are headed up, the deceptive lead generation ads are crawling back onto the web. Here’s a great example from a Google ad:

FHA Refinance 4.0% Fixed
$160,000 FHA mortgage for $633/mo.
No SSN req.
Calculate payments now!
MortgageRefinance.LendGo.com

When clicking through, the lendgo.com lead generation site asks some simple questions like the value of my home, zip code, whether or not I’ve ever filed bankruptcy, etc. Then I’m asked to provide personal information and assured that I’m dealing with a secure website. Name address, phone number, etc. After I click “submit,” I’m told that I will be given four quotes. I clicked ‘submit’ after offering them the following:
First Name: Your Ad
Last Name: Violates TILA
But I don’t get a quote. Instead I’m asked even more questions before being told that four lenders will contact me within 24 hours: Quicken Loans, Onyx Mortgage, Americash Mortgage Bankers (I’m thinking it was a seven beer night when someone decided on that name), and….I’m totally surprised here: Paramount Equity Mortgage.

So, Quicken, Onyx, Americash, and PEM, Are you aware that the lead generation company you’re using is violating the Truth in Lending Act and probably a handful of state laws by advertising a note rate without conspicuously including APR in that ad?

I bet someone at these mortgage companies assumed that no one would be able to trace the deceptive ad back to them. Nah, their chief compliance officer couldn’t be that stupid. Oh wait, maybe they don’t have a chief compliance officer. Or perhaps these big mortgage companies are just making a strategic business decision: Violate TILA and some state laws and if we get caught, we’ll just pay the fine and move on because we’ll be able to earn six times the amount of the fine anyways.

Regulators: You’re being tossed under the bus in Washington D.C. this week as banker after banker stands before various congressional committees telling the world that the bank regulators were asleep at the wheel. I’m not going to throw you under the bus. Why? Because there never will be enough money to regulate every single mortgage lending transaction across your area of authority. You’ve got limited resources and regulators are always trying to balance everyone’s needs and are constantly being pulled in 10 different directions at once.

So I’d like to give the regulators a helping hand.

If mortgage companies are buying leads from a firm that’s using deceptive advertising, you can write out 5 consent orders and be very efficient with your time. Just start clicking on all the banner ads! It will be easy and mildly entertaining for your staff! At the same time, you’ll help consumers avoid getting sucked into doing business with a company that has chosen a business model of attracting consumers who are an easy mark.

They fell for the click through ad. They believed there was a 30 year fixed rate mortgage available under 4 percent! If they were stupid enough to fall for this, then that means perhaps the mortgage company can also win all kinds of other shell games with these folks, who probably believe there’s a diet pill that will help them lose those last 10 pounds and that the secret to prosperity and abundance is to think thoughtful thoughts.

Wait! Maybe that’s the secret to the housing market recovery: We can just use the power of abundant thinking to “think” away all those short sale, REOs, and re-defaulting loan mods! If anyone’s going to try this, let me know and I’ll calendar ahead to check back with you in 2014.

Here’s another google ad:
3.44% APR – Refinance Now
$200,000 Mortgage for $898/Month!
As Featured on CNNMoney & Forbes.
DeltaPrimeRefinance.com

Oh my goodness! This lead generation firm actually quoted APR! Which would be a cause for celebration, until you click through and see that they’re quoting a 5/1 ARM loan, and then they also inform us that this might be a 15 year amortization. Of course the APR looks awesome. Regulators, it would be interesting to find out exactly how many people, after filling out the online lead generation form, decided to select a traditional 30 year fixed rate loan instead of an ARM loan or a 15 year amortization. Classic bait and switch. Like shooting fish in a barrel.

These lead generation companies appear to hold a mortgage broker or lender licenses in various states, yet the consumer information is sold to other licensed brokers or lenders.

Question: Are mortgage brokers, lenders and banks responsible for making sure the leads they purchased are generated by advertisements that do not violate state and federal law? If the answer is no, then deceptive mortgage lending advertising will continue to grow as long as brokers, lenders and banks are able to skirt law by purchasing these leads.

To the loan originators who regularily purchase these leads: we need to send you to Tiger’s rehab center and wean you off the crack. Deceptive ads are poison to the system and they make it harder for you to procure clients using advertising methods that are transparent, ethical, and legal.

Maybe the broker/lender/banker willl say “We sign a contract and it’s the lead gen company’s responsibility to make sure the leads are generated according to state and federal law.” If I was a regulator (and sometimes I like to put on a dark blue suit and high heels and pretend I’m a regulator in the privacy of my own home) I might say, in response, “So what method do you use to be certain that the lead gen companies you deal with are advertising according to state and federal law?”

Quicken Loans, Onyx Mortgage, Americash Mortgage Bankers and Paramount Equity Mortgage, all a rational, thinking consumer has to do is google or bing your company name with the word “complaints” in the search box like I just did and they’d have all the info they need. But the rational, thinking consumer is not your target market.

Mortgage Lender Associations Announce Whining Moratorium on New GFE

Posted on April 1, 2010 by Jillayne Schlicke

Several Mortgage Lender Associations nationwide have announced a 6 month moratorium on the incessant whining regarding the new Good Faith Estimate. Attention will be immediately shifted to proposed rules by the Federal Reserve Board which may eliminate compensation based on placing a consumer into a higher rate loan or a less favorable loan product.

“Flat fee compensation is bad for consumers because only an idiot would originate a loan without the ability to potentially make thousands more by selling the consumer a higher rate loan than they think they could get” said Billie Joe, a loan originator from Tukwila. “This will mean reduced competition for consumers as all the good salespeople will go back to working at the used car lots.” Tre, who goes by his LO gang name, “Tre Cool,” agrees. “At the top of the bubble, I could make a 1 percent loan origination fee, another 1 percent mortgage broker fee, if the customer were stupid enough not to know what a discount point was, I could make another couple of points in discount, toss in $500 for an admin fee, another $500 processing fee and then make upwards of 4 to 5 points on the back end, as long as I sold a Pay Option ARM loan and as long as the dupe THOUGHT they were getting a lower monthly payment, nobody questioned my fee income! That party’s no longer real, man. Today I’m lucky if I can make 1 point.” Originator Mike D has a different perspective. “Dude, like when you think about it, I only spend about 4 hours on a file. My average loan amount is $400,000 so even though I’m makin’ $4,000 on that one transaction, I’m, like still earning $1,000 per hour. That impresses the ladies and pays all my bills so I’m not gonna rock the boat on this new proposed rule. Get back with me when that sh*t becomes real, man.”

Until then, the industry is still working very hard at containing the radical mortgage militia cells who continue to work day and night on repealing the unpleasant Home Valuation Code of Conduct( HVCC,) pledging to change this rule “or die trying.” According to one source, who asked to remain anonymous,

“Mortgage lenders have an enormous capacity for joining together and making our voices heard collectively. When we brought boxes of signed petitions to the New York Attorney General’s office to force an immediate ban on the grave hardship HVCC has caused our industry, and uh, consumers, not one change was made. But if and when anyone actually does listen to our collective voices we’ll all be the first to celebrate a victory that will once again include our ability to influence appraisers and we are already planning the celebration in which we’ll all get extremely drunk and eat free appetizers. A title insurance company has already stepped forward to pay for the food and refreshments. Not one dime of this celebration will be paid for out of taxpayer dollars.”

Predatory Short Sale Negotiators

Posted on February 5, 2010 by Jillayne Schlicke

I received a call the other day from a consumer who was in the process of purchasing a short sale home. The homeowner has defaulted on her mortgage and the trustee sale auction has been postponed a few times now that this buyer’s firm offer has finally reached the lender’s loss mitigation decision-maker. Once the offer was accepted by the seller, the homebuyer was surprised to learn that there’s a third party involved, a “Short Sale Negotiator” who is charging an additional $9,000 fee on top of the real estate commissions paid to both the agent for the seller and the agent for the buyer. The Short Sale Negotiator is demanding that the homebuyer sign an agreement that the homebuyer will be responsible for paying the $9,000 fee. The homebuyer emailed me asking what I thought of this additional fee and could I offer some advice.

The first thing I did was to find out the name of the Short Sale Negotiator company, the owner of the company, and the person who is doing the short sale negotiating. I discovered that the negotiation company is owned by the same person who also owns the real estate firm where the listing agent works. I also ran the name of the short sale negotiator and discovered that this person IS a licensed real estate agent.

Readers please note that WA State’s regulators recently changed the real estate licensing laws and there’s a great FAQ section here that answers the question: Does a Short Sale Negotiator have to be a licensed real estate agent? The answer is yes, or a licensed loan originator or otherwise exempt from licensing such as an attorney. (Clicking through from the link, scroll down to “doing business” and see the second question.)

So we have a licensed real estate agent who is earning money as a short sale negotiator who works for a company owned by the same person who owns the listing agent’s real estate company.

There are a couple of things that come to mind here. First of all, isn’t there a bit of a conflict of interest for the real estate broker/owner of that company? Where are your duties? To the home seller, whose listing you’re charged with overseeing, or are your duties to the buyer, a client who signs the agreement to pay your other company $9K? What are the duties of disclosure to BOTH the seller and the buyer?

For example, if I’m the seller in this transaction, charging a buyer an extra $9,000 out of pocket might preclude a number of qualified buyers to make an offer….unless I hold back this information until after the buyer has emotionally fallen in love with the home and is already arranging the furniture in his/her mind. That seems manipulative. Why not tell all possible prospects up front what the short sale negotiator’s fee is: Make it mandatory to display this extra fee in the PUBLIC comment section of the multiple listing service.

You might be thinking: “Yes we could disclose this god-awful fee to the public this but that’s not in the best interest of the home seller.” Well, okay but what happens if you end up attracting a lot of buyers but they all walk when told of this high third party fee? Now the listing agent has wasted everyone’s time. It’s like if someone asks me out on a date and then later he tells me he’s married. Come on! Hey, some women might say yes and it’s nice to know up front how big of an a-hole a guy is. I say the listing agent would actually be attracting the right kind of buyer if they disclosed that their Short Sale Listing comes with baggage. It seems to work fine for the married guys who post personal ads on craigslist day after day.

More: If there is an affiliated business arrangement going on between the two companies that are owned by the same person/people, then a RESPA-required Affiliated Business Arrangement disclosure form should ALSO be required so that the home seller and home buyer are aware of the dual company ownership. Part of that AFBA disclosure form should state that the homebuyer understands that buying this home means he/she does NOT have to use this particular short sale negotiation firm and is free to select another short sale negotiation company to do the same or similar work. However, since a ‘short sale negotiator fee’ might not necessarily be classified as a “settlement service” then this rule might not apply. HUD are you listening? It’s highly possible that the next time a federal regulator makes it out to Washington State, the Seahawks will have won the Superbowl. Knowig this, we should look to the state regulators for assistance.

For a home buyer, a big red flag would be if the listing agent demands that you use this affiliated short sale negotiator. Demanding that a buyer use a real estate broker’s affiliated company is a licensing law violation as well as a violation of federal law when those companies are a title, escrow, appraisal company, and so forth. So why not a short sale negotiations company also?

Even more: Is the listing agent receiving part of that $9,000 fee? One way of structuring this is for the owner of both companies to promise the listing agent something like this: “if the lender cuts your commission, don’t worry, I’ll give you a portion of that $9,000 negotiator fee.” Unearned fees are not allowed under RESPA.

Even worse: Is the short sale negotiator splitting the $9,000 with the home seller? How fast can you say “Mortgage Fraud is now a Class B Felony in Washington State?”

The other logical problem that comes up for me when I see an additional fee of $9,000 is this: what work is being done for NINE THOUSAND DOLLARS? That’s an awful lot of money. I could install all new vinyl windows in my 1959 house with that kind of money. I could put this in my teenager’s college fund. I could accomplish a lot with $9,000 so why would I want to pay that kind of money to a short sale negotiator? Is this like extortion/payola in order to get that particular house for that price?

Maybe not. What is this third party negotiations company doing for their $9,000? Wait, let me go find out. I’ll read their website. Gee, there’s nothing on the website telling a consumer what their company actually does for that fee but the pictures of their team tell me they’re all good looking guys under 30. Not that there’s anything wrong with doing business with good looking guys under 30 but it should make us wonder how much experience the negotiator has at short sale negotiating. In 2009 I believe we added ten million “short sale experts” in the real estate industry.

My advice to the consumer: Negotiate that fee down to somewhere around $1,000 to $2,000. If the home is that close to the auction date, tell your real estate agent that you’re going to buy the home at the auction if the lender won’t approve the short sale and if the negotiators won’t go for a reduced fee. Most of the third party short sale negotiators out there are paid much less than $9,000.

Here’s some help with the math: I asked the consumer to ask the short sale negotiator how many hours he’s spending on this file v. how many hours he’s working on those biceps. Consumer says the SSN said he’s spent 10 hours so far on this transation! !! !!! Wow! Well! Okay then, let’s divide $9,000 by 10 hours. That’s a going rate of $900 per hour. That’s probably close to the hourly rate charged by the Johnnie Cochran law firm for litigation cases and I’m fairly certain that this licensed real estate agent negotiator doesn’t have as much experience or education as the JC legal team. Counter back with $100/hour and settle around $200/hour max.

I am betting they’ll take the $2k.

Ask for the negotiator’s $2K to be put on the HUD I Settlement Statement as a seller’s closing cost. There’s a chance the lender will pay it. If not, the buyer needs to as himself: Is this house worth $2k out of pocket at closing? It’s also important for the buyer’s new lender to know about this additional fee. Insist that it’s paid out through escrow and shows on the buyer’s side of the HUD I Settlement Statement if the lender refuses to pay it as a seller’s cost.

Buyers: do not agree to pay any money after closing, on the side, without disclosing this additional amount to all parties including the lender.

Predatory Short Sale Negotiators: The world is watching you. I wonder if your dreams are haunted the way I was haunted after watching The Hurt Locker. Soon your predatory fees are going to explode in your face. Oh, and loan mod salesmen thinking that being a short sale negotiator is the next big way to “make six figures with no experience,” please go back to the used car lots. I’m sure there are some openings at the Toyota dealerships.

Rhonda Porter Receives the Jim Fitzgerald Service Award from WAMP

Posted on October 6, 2009 by Jillayne Schlicke

Today, during the Washington Association of Mortgage Professional’s State “Connect” Convention, Raincityguide author Rhonda Porter was presented with the Jim Fitzgerald Distinguished Service Award for her outstanding contribution to the mortgage broker and lender community. Presenting the award was Rhonda’s brother-in-law John Porter who received the same award from his father, Bob Porter, who ALSO received the award. Yes, mortgage lending does have a way of running in the family.

Jim Fitzgerald passed away in April of 1999 at the young age of 48. He was President of the Washington Association of Mortgage Brokers in 1994 and an active member of WAMB,* working tirelessly on behalf of the membership. “Jim worked hard to bring the Association up to a new level.” John Porter said, “People knew Jim all over the country even before social networking started. This is the most honorable award I ever received and I am so proud to present this to my sister-in-law.”

This year Rhonda volunteered to be the WAMP Social Media Chairman. She created a facebook page for the Association and helped organize two Social Media RE Bar camps during these last few months and has volunteered her time to help mortgage professionals here in Washington State and in other states learn how to effectively and professionally participate in social media.

Rhonda, we are all proud to know you.

*WAMB is now WAMP
Wash Assoc of Mortgage Brokers changed their name in 2008 to the Wash Association of Mortgage Professionals

Below, WAMP President Jason Bloom with Rhonda Porter.

Rhonda

FTC Considers Total Ban on Upfront Loan Modification Fees

Posted on September 17, 2009 by Jillayne Schlicke

143

It’s about time. I’ve been saying this is going to turn into a national crisis for a year now. From the AP

The head of the Federal Trade Commission said Thursday the agency is considering banning upfront payments to companies that advertise help for borrowers who are in trouble on their home loans.

Government officials say scammers seeking to take advantage of borrowers in danger of default often charge upfront fees of $1,000 to $3,000 for help with loan modifications that rarely, if ever, pay off.

“If you are concerned about keeping your home, avoid any company that asks you for a large fee in advance. That is a real red flag,” said Jon Leibowitz, chairman of the FTC. Such upfront fees are already prohibited in 20 states.

Let’s ban all up front fees unless the service provider is a member of a State Bar Association. Attorney-backed loan mod firms charging upfront fees are not a good option either. That set up is typically a subprime salesperson boiler room. The California investigation found that with attorney-backed loan mod firms, never once did an actual attorney touch the file. Read more about the loan mod mess in California here.

Third party loan mod salesmen should only be allowed to collect a fee once the loan modification is not only performed but also after the homeowner has made a specific number of on time payments. This will rid the system of the Devil’s Rejects subprime LOs who act like they just walked off the set of a Rob Zombie movie and can only smell money. Let’s leave the real work to the people who can help homeowners figure out if they can actually afford to stay in the home or if they are better off selling.

It seems there will always be a certain percentage of people who will believe anything and an equal percentage of people willing to prey on them. But with a person’s home, the stakes are higher than an acai berry total body cleanse.

I predict that we will have the usual suspects crying that the FTCs actions will only raise the cost of hiring a third party loan mod company. I call BS on that argument because homeowners have always been able to receive a loan mod for free by working directly with their lender, or receiving free help from a non-profit housing counseling agency or by seeking out free legal aid from their state’s Bar Association.

Loan Mod Firms: Attorney “Backed” or Attorney Representation

Posted on July 19, 2009 by Jillayne Schlicke

A story today in the NY Times contains interviews with salespeople who worked for an attorney-backed loan modification firm in California that is now under state investigation for defrauding desperate homeowners.

“Despite making promises of relief to homeowners desperate to keep their homes, FedMod and other profit making loan modification firms often fail to deliver, according to a New York Times investigation based on interviews with scores of former employees and customers, more than 650 complaints filed with the Better Business Bureau, and documents filed by the Federal Trade Commission in a lawsuit against the company. The suit, filed in California federal court, asserts that FedMod frequently exaggerated its rates of success, advised clients to stop making their mortgage payments, did little or nothing to modify loans and failed to promptly refund fees…For fees reaching $3,495, with most of the money collected upfront, they promised to negotiate with lenders to lower payments on the now-delinquent mortgages they and their counterparts had sprinkled liberally across Southern California. “We just changed the script and changed the product we were selling,

Everyone Does Not Qualify for a Loan Mod

Posted on July 14, 2009 by Jillayne Schlicke

Loan modification fever is here. Families all over the U.S. are struggling to make their mortgage payments and many are expressing frustration that their lender won’t modify their loan. Any of us could try to make a rational argument that a lender is better off modifying a mortgage loan instead of foreclosing but this is a simple answer to a complex problem. This blog post will help homeowners understand who is not going to get a loan mod. Hopefully homeowners will be able to then move forward toward other solutions.

Loan modifications are not for people in temporary financial distress. Temporary financial distress is when a homeowner missed a payment for one or two months because of a temporary hardship. Lenders can and do help these folks with a forbearance and repayment plan where the missed payments are made up over time or tacked on to the end of the mortgage. This is not a loan modification, it’s a repayment plan. If your financial distress is only TEMPORARY then asking for a full-on loan mod is wasting your time and everyone elses time. New research out this week from CR shows us that 30% of all delinquent borrowers self-cure without receiving any kind of loan modification. This means lenders who can effectively triage out borrowers likely to self-cure are behaving rationally by setting aside pleas for loan mods.

Long term financial hardship means homeowners need long term financial solutions. A loan modification is only ONE of MANY long term solutions. In order for a homeowner to receive a loan mod, the homeowner must be able to document stable monthly income. Lenders have to re-underwrite the file to make sure that the loan modification will not result in further loss to the lender. This takes time. If a homeowner’s monthly income has dropped so low, to the point where they really can’t qualify to repay the modified loan, this loan modification will not be approved nor should it. (Note: Lender guidelines on qualifications vary and change often, just like the retail side of lending.) This homeowner should consider other options which will be outlined below. It should be beyond clear by now that lenders are not going to voluntarily start reducing principal balances unless forced by gunpoint. The government can try to shame them into it but let’s face it: most corporations are shameless and nothing any of us say and do is going to change this.

Long term financial hardship cases do happen. Case in point. I received an email last night from a homeowner who is on permanent disability. Her husband just got laid off. They are seeking a loan mod. In no way can they afford the $4500/month payment on their interest only loan so they’d like the lender to lower the payment (lower the interest-only rate, extend the term). They are $100,000 negative equity. Sounds rough, doesn’t it? However, they happen to have $250,00 in the bank. This is not a case of financial hardship! A lender would be wasting time and money modifying this loan. These homeowners HAVE MONEY in the bank to continue to make their existing payment for many more months. Besides, looking at the amount of money coming in the door each month, once their money runs out, chance of a re-default is sky high. The only thing a loan mod does for these homeowners is it keeps them in their home for a little while longer. If the husband can become re-employed at his same rate of pay, maybe the chance of default drops a bit, but no lender will modify this loan if there’s literally zero money coming in every month. This lender is making a good business decision to put this file on ice while they continue to pay as agreed each month using their $250K.

I agree with CR: “If it became widely known that lenders routinely reduce the principal balance for delinquent borrowers with negative equity, this would be an incentive for a large number of additional homeowners to stop paying their mortgages.” It would be rational for negative equity homeowners to make the decision to trash their credit score in exchange for a shot at wiping out $50K, $100K+ negative equity if they wanted to keep their home. We shouldn’t hold our breath for lenders to make principal balance reductions en masse.

I have not worked in loan servicing for many years but when I did, there was a triage system of making sure cases that were going to cost the bank the most money were prioritized over cases that could wait longer. We already know that loan servicing departments are far understaffed for the tsunami that’s hitting them full on. If we want banks to beef up staffing and spend money hiring and training more loss mitigation underwriters, the expense for these costs is going to be priced into new mortgage loans made tomorrow and in the future. Even so, this will take time. Working in loan servicing is a very high stress job. Imagine what it’s like to work 8 to 5 every day with a 1 hour break from lunch and 2, 15-minute breaks…with the rest of your day spent being yelled at by Realtors asking for their short sales to be approved RIGHT NOW. High stress = high turnover. I could never do that job today because I’d yell back and surely get fired.

Homeowners with bonafide cases of lender law violations or predatory lending can and should be prioritized in getting help modifying their loans. These homeowners are better served by hiring competent legal counsel to represent their interests in negotiating fair and just mortgage terms. But that’s not what’s happening today.

Today, it seems that the masses believe they deserve a loan mod based on whatever is going on in their lives. Job loss, reduction in hours, on and on….I know I may sound heartless here but lenders need to make sure you are able to repay a modified loan and that you are eligible for a loan modification under their specific guidelines. Not everyone will qualify.

Options beyond a loan modification:

Move out of the house
If you don’t want to sell the home, perhaps you will be able to rent out your home and cover or almost cover the mortgage payment. Then you can seek out other living arrangements that comport with your ability to pay. When your income adjusts upward again, you can move back in.

Take on a tenant
Maybe you can rent out your basement or spare room to a tenant. I know several people who are doing this just so that they can make their own mortgage payment. Check your local city or county rental guidelines.

Sell the home
If you have negative equity, interview at least three real estate agents who are COMPETENT in the practice of listing and selling short sales. Do NOT hire an agent who has no experience in short sales. If you decide to hire a Realtor who’s your friend or relative and that person has no experience listing and selling short sales, you get what you deserve.

Hire an attorney
Some homeowners seek out a loan modification only to find out that the real problem was far beyond just the mortgage but instead was an abundance of consumer credit card debt. Maybe an appointment with an attorney who represents debtors is in your future. An attorney can fully explain all the reasons for and reasons against letting the home go to foreclosure, as well as all the legal consequences. News today suggests a foreclosed homeowner might even be able to rent back their home from the lender!

Whatever you do, do NOT pay ANYONE cash up front for services before the services are actually performed (with the exception of when you hire an attorney.) If you part with cash to pay a loan mod company, you are setting yourself up to become re-victimized. They will tell you anything you want to hear in order to get your money because they know you are desperate. If you have money, hire your own attorney who will represent you directly. If you do not have money, contact your state’s bar association for a referral to free legal aid.

Also worth saying: Avoid any third party who claims to have a solution to all your problems and asks you to sign anything. Especially if they say, “This is perfectly legal.” Before signing anything hire your own local legal counsel. Foreclosure rescue scams continue to be on the rise nationwide.

Not everyone will qualify for a loan mod and not everyone is going to get their loan mod processed in a timeframe that the majority would consider anywhere near “good customer service.” Loan servicing doesn’t have to provide you with good customer service because you have no where else to go. There is no automated underwriting slam dunk approval system for loan mods. There’s no stated income program for loan mods. Real humans underwrite the file and this takes time. It’s going to take many, many years to work all the bad loans out of the system. We are in for a long ride. If you don’t qualify for a loan mod it might be time to move on to other solutions.

$8K Tax Credit Closing Deadline of Nov 30 Could Slow Interest in Short Sales

Posted on July 9, 2009 by Jillayne Schlicke

Kary brings up an excellent point here.

“One other agent short sale issue is going to pop up shortly, if it hasn’t already, but it will be a buyer’s agent issue. The $8,000 first time home buyer credit needs a property to close by November 30. Making an offer on a short sale property, without advising a first time homeowner of the risk of not closing by the deadline is probably malpractice. It’s sort of a “suitability” issue for real estate.”

It’s not outside the realm of possibility that falling in love with a short sale today means the transaction may not close by Nov 30, 2009. I suppose there might be a chance that the tax credit will be extended or even expanded. Yet many homeowners with Option ARMs were given verbal assurances that they would be able to easily refinance.

I wonder what life is going to be like inside loan servicing during the month of November, when the pressure will be sky high to get these short sales APPROVED so the buyers can make the closing deadline?

Notice of Trustee Sales v. Trustee Deeds

Posted on July 1, 2009 by Jillayne Schlicke

Each month, Alan from Seattle Bubble religiously posts the Notice of Trustee Sale (NTS) numbers for King County. I’m very appreciative of his work because it saves me time each month so thanks again, Alan. Cruising SB last night, I found Alan’s numbers alarming for June: 1615 NTS were filed. Here are more numbers from Alan:

King County Notice of Trustee Sales

6/2009 – 1615
6/2008 – 576
6/2007 – 304
6/2006 – 299

180% YOY (280% of last year)

The last few months:
6/2009 – 1615
5/2009 – 992
4/2009 – 938
3/2009: 1089
2/2009: 838
1/2009: 909
12/2008: 660
11/2008: 540
10/2008: 643
9/2008: 607
8/2008: 575
7/2008: 728

If we’re seeing 180% increase year over year with notice of trustee sale filings, then where are the REOs? Well as it turns out, if you compare the trustee deed filings for the same month, you’ll see that a low percentage of Notice of Trustee Sales actually go all the way through the auction process. Here’s comparison data courtesy of Jess and Julie Lyda, which gives us a visual comparing NTS v. Trustee Deeds, which means title changed hands from the owner in default to a new owner. That new owner could be the bank/lender or someone who was the high bidder at the trustee sale. Here’s a link to a larger image of the graph.

So what assumptions can we make given facts that we already know? We already know that banks and lenders are postponing the majority of trustee sales in King County. We don’t have any data as to how long postponements are lasting. If a homeowner is trying for a short sale or loan modification, we do know that the average wait time for banks to process these requests could easily be months based on nationwide reports from Realtors, home buyers and homeowners. We also know that there are many banks who have turned into zombies, waiting for their number to be called and the regulators to show up on a Friday afternoon. Postponing the losses from a foreclosure means the bankers can collect a paycheck for a few more months.

We also know that 50% of all loan modifications re-default by the 6 month mark. This pushes the foreclosure out longer and increases the overall losses to the bank/lender. Another assumption we can make comparing data from Alan and Julie is that hundreds of REOs will be coming back on the market each month, which will put further pressure on home values. Prime delinquencies are starting to surge and so are delinquencies in the upper home price ranges.

With what we know, home values will continue to feel pressure from many angles including higher inventory levels, continued tightening of underwriting guidelines, the lower prices of REO resales and short sales.

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Author Archives: Jillayne Schlicke