Homeowners Must Act To Save Their Homes From Foreclosure – There is no foreclosure moratorium!

May 19, 2009- As part of the Obama Helping Families Save Their Homes Act of 2009, Congress provided guidance to loan holders, servicers, and homeowners in dealing with potential foreclosure or a foreclosure moratorium.

The legislation provides that Congress feels that lenders and servicers of mortgages should not start foreclosure proceedings or foreclosure sales on a homeowner’s primary residence until the foreclosure provisions of the recent plans have been fully implemented.

Congress also states that they feel that the homeowner should also keep a home that may be in foreclosure in good repair, not allow damage to occur to the property, and should respond to the servicer or holder of their loan to requests during this foreclosure moratorium.

Homeowners should beware because this is not a federal foreclosure moratorium, but only sets out the general feelings of the US Congress and duties they think should be imposed. Your lender or servicing company can and will still move forward with foreclosure, so you must act to save your home. These are just guidelines and recommendations. Do not assume this foreclosure moratorium discussion bans lenders from foreclosure, trustee sales, or evicting you from your home!

Chris Barsness, Esq.
Law Office of Barsness and Cohen

Congress approves Helping Families Save Their Homes Act of 2009

May 19, 2009- Congress passed the Helping Families Save Their Homes Act of 2009 sending the legislation to President Obama for signature. This program expands the previously announced Obama Making Homes Affordable and Homeowner Affordability and Stability plans. Although the provisions that would give bankruptcy judges the power to cram down mortgage in bankruptcy proceedings was absent, the legislation adds more incentives to lenders to keep people in their homes with reasonable payments through mortgage modifications.

The act expands the number of homeowners who will be eligible for loan modifications. These programs can extend mortgages to 40 years, reduce interest rates, and reduce the principal on both first and second mortgages for a person’s primary house. If a home that has a modified loan under this program is sold within the first 5 years after the modification, the mortgage holder (lender) gets anywhere from 10 to 90 percent of any equity accumulation from the net sales proceeds.

Since the plan gives the loan servicer (who is usually the only person you can negotiate with when it comes to your loan) a safe harbor when entering into certain loan modifications, workouts, or other loss mitigation plans, this should help push servicing companies to worry less about liability in modifying loans and more about helping homeowners.

The legislation also extends the increased Federal Deposit Insurance Act (FDIC) coverage limit from $100,000 to $250,000 from the end of 2010 to the end of 2015.

Chris Barsness, Esq.
Law Office of Barsness and Cohen

California Foreclosures Accelerate

Industry source, RealtyTrac, announced that a record number of foreclosures went forward in April. A total of 342,000 homes received notices of default, auction notices or underwent bank repossessions in the month of April.

California easily outpaced every other state with with 96,560 filings, which is not a surprise to me. In our practice defending homeowners, the banks have accelerated the pace with which they are deciding to simply take over properties, even if they are underwater. Despite these bleak numbers, record numbers of loan modifications are still going through. The guidelines of the Obama Making Homes Affordable Plan have pretty much been implemented by most banks and they are processing applications quicker than in the past. The banks also seem to be more willing to work with people at most stages of delinquency, even those that are current on payments.

The trouble is that most homeowners wait until they are approaching a trustee sale date that is weeks away and it is virtually too late to help them. We have fought in court and stopped trustee sales literally hours before the sale, but that is not always the case. Usually lenders need several weeks prior to a trustee sale to review documents and voluntarily agree to postpone the sale.

Don’t hesitate, there are programs available for many homeowners, but waiting too long can result in your lender writing it off for foreclosure sale.

If your home is about to or was just sold at a trustee sale, the lenders may be willing to pay you to turn over your home in a timely fashion and avoid the lender having to proceed with an unlawful detainer (eviction) proceeding in court. There are options available.

If you would like a free consultation, please contact us at 888-881-6591 or visit http://www.loanlawyermodification.com
You can also read more about the foreclosure numbers at www.realtytrac.com

Obama Bankruptcy Mortgage Cram Down Fails

April 30, 2009- The second step in assisting homeowners who are in jeopardy of losing their homes in foreclosure was defeated today in the U.S. Senate. The proposed law would have given bankruptcy judges the power to force lenders to modify mortgages on the debtor’s home. The so-called “cram down” powers would be useful in adding leverage on the big banks to work with homeowners to avoid a judge ordering a modification. As it is now, the borrower can attempt to re-affirm their debt with the lender to keep their home during the bankruptcy process. They will still be able to attempt this; however, the banks will likely not be as willing to make any kind of changes or modifications to the actual terms. They will likely ask the borrower simply to reaffirm the debt on the same terms they originally had, but adding the unpaid or late payments to the principal.

If you have any questions about bankruptcy, loan modifications, or foreclosure relief, you can call for a free consultation.

Chris Barsness, Esq.
Law Office of Barsness & Cohen, Beverly Hills, California

No Foreclosure Moratorium

Beware of the news in the last several months about lenders or the state instituting a halt on foreclosures! Although California has passed new legislation to delay potential foreclosures, the banks are moving forward at record speed with trustee sales that may not be legal. There are new procedural requirements under California Civil Code Section 2923.5, as well as the duties places upon loan servicing companies under Section 2923.6 to maximize net present value.

Many banks will not postpone a trustee sale to work with homeowners if it is within a few weeks of the trustee sale date, especially if they have postponed the sale one or more times in the past. You need to act quickly to prevent the trustee selling your home. Our firm goes to court to obtain a judge’s order to stop the trustee sale, but we need ample time to prepare the necessary paperwork, get a judge to sign the order, and serve the trustee with the order prior to the sale.

If you would like more information, you can receive a free consultation by calling us at 888-881-6591 or submitting your case online at http://www.loanlawyermodification.com

or http://www.loanmodificationlosangeles.net

Obama versus big banks

Big Banks versus Obama, who will win the foreclosure dilemma?

February 17, 2009 President Obama is set to outline the details of his housing foreclosure relief package this Wednesday in Phoenix. He will likely face significant republican opposition to any measures to modify the principal on home mortgages. Proposed measures that could be taken are: 1) to change the law to allow bankruptcy judges to modify the principal owed on a home loan during bankruptcy proceedings, or 2) force the banks to reduce the principal owed to the home’s current fair value and waive past due payments. Although the big bank CEOs claim to be making every effort to help homeowners, very little, if any, are likely willing to actually reduce the amount of the loan or waive payments. Part of this may have to do with huge potential losses that may not yet be recognized on their books.

The mortgage banking accounting rules can be somewhat complex and confusing, but depending upon how the mortgages or mortgage backed securities are classified, they are either accounted for at amortized cost or under a fair value calculation. The fair value calculation is supposed to result in an accurate current value of the mortgages or mortgage back securities held by an institution, with resulting unrealized losses expensed on a regular basis. If they are held to maturity, they can be held at cost, i.e. approximately the original loan amount. Therefore, any mortgages or mortgage back securities classified as held to maturity are held against collateral that, based upon our current market, have dropped in value significantly. If those mortgages eventually go to foreclosure and the collateral is sold, the difference between the loan amount and the sale price will be recognized as a loss. How many potential problem mortgages are being held to maturity with huge unreported losses? A reduction in the principal of the loan and waivers of delinquent payments would result in losses that would be recognized currently, perhaps beyond what has been recognized, even under fair value accounting.

What happens if the banks foreclose on properties, but don’t sell them to avoid taking the losses until the market bounces back? I don’t think we can say we know the full extent of the problem for now.

Some homeowners feel that this would wrongly benefit homeowners who bought at too high a purchase price or got in over their head with adjustable or hybrid mortgages they couldn’t afford. However, there are federal and state laws that have been implemented to protect consumers from predatory lending and deceptive practices. Many lenders relaxed underwriting standards, deceived or manipulated consumers, and pushed what they knew were risky loans in order to grab a larger market share.

A reduction in principal is not necessarily a win-win for the consumer. Unless tax laws are changed, in certain circumstances, the reduction in the loan amount can be classified as “loan forgiveness income.” For example, if a homeowner gets their mortgage reduced from $400,000 at 8% interest to $300,000 at 6% interest, their payment will go down by over $1,100 per month, but they will have to report an additional $100,000 in income for that tax year.

Although we hope our Congress and the President will come up with a solution to the current prob
lem without giving in to any big bank special interest pressure. The simple fact is that homeowners can’t wait for months or years for new legislation to take place. They need to protect their homes immediately. The banks have the legal right to pursue foreclosure and will continue to do so. There are legal steps that homeowners can take to protect themselves, such as loan modifications, forbearance plans, deeds in lieu of foreclosure, short sales, or bankruptcy. A licensed attorney can provide a comprehensive review of your situation and guide you to the right solution.

The Law Office of Barsness & Cohen is a California based law firm providing legal advice and solutions for clients facing foreclosure or other real estate issues. We assist clients in the state of California for a flat fee in obtaining the best possible legal option for foreclosure relief, including loan modifications, short sales, bankruptcy, and other alternatives. We are a Debt Relief Agency as defined by Federal Law. We help people file for relief under the Bankruptcy Code.

Call us or visit online today for a free initial consultation at: (888) 881-6591 or http://www.loanmodificationlosangeles.net


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