Democrats crush housing, recovery and US economy

In July 2010 the US Congress and Senate passed a massive bill called the Dodd-Frank reform bill. Since it was 2300 pages long, I did not get a chance to read it all, how about you? Exactly, after the first page I fell asleep, so how about we let The Obamanator explain some of it and well score his success? From his 7/15/2010 press conference, "The United States Congress has now passed a Wall Street reform bill that will bring greater economic security to families and businesses across the country." Let's see how our elected officials are helping us.

1. Obamanator says, "Because of this reform, the American people will never again be asked to foot the bill for Wall Street’s mistakes." There will be no more taxpayer-funded bailouts -- period." Answer: Actually the bank bailouts cost US Taxpayers $1.2 Trillion.

2. Obamanator says, "The financial industry is central to our nation’s ability to grow, to prosper, to compete and to innovate. This reform will foster that innovation, not hamper it."
Answer: Foreclosures are an epidemic and the unemployment rate decreased, but only because the incarceration rate increased and more people are joining the military for employment purposes.

3. Obamanator says, "That’s why we invested in renewable energy that’s currently creating new jobs all across America...reforming education so that our workers can compete in the global economy....reforming health care that will lower costs for families and businesses."
Answer: The only new jobs being created are in health care and minimum wage retail sector. Education across the country has been decimated by layoff's, poor scores and over crowding, just like the prisons. The health care costs in this country have actually sky-rocketed for everyone except the poor, so again, nothing beneficial for the US economy here.

So after careful review of only 3 bullet points in over 2300 pages, I have given the current Administration an F- for their efforts. They have screwed the next two generations of US citizen, taxpayer, and home owner, they have debased the value of the dollar, decreased our education while simultaneously increasing the prison population and military spending. Now I know why only 3 Republicans voted "yes" on this bill! At least the Republicans create a false sense of happiness with increased employment, higher education, and economic booms during their reign of massive spending!

Your loan modification will not get approved

Hello again, thanks for reading! Here we are almost two years and 19 known loan modification denials later. Back in April 09 we started a discussion about loan mods, short-sales and the TARP bailout, thinking we were at the bottom and help was coming, but things have not gotten any better.....for the middle class anyway. Banks have made some money, the wealthy have done pretty well with the tax cuts, Gov't incentives, and of course, their personal investments, all while the middle class have lost most of their life savings. So who is to blame, Goldman Sachs, the US Gov't, the man on the grassy knoll, or Bernie Madoff? Well it was Bernie Madoff of course. He took $ billions, lost it and went to jail for 1000 years, while Wall Street took $ billions, lost it, and was rewarded with $ billions in incentives and bonuses. Want to read more about this? Matt Taibbi's Feb. 2011 Rolling Stone article entitled, "why isn't Wall Street in jail" will be available online tomorrow? Get your barf bag or punching bag ready, it is disturbing and anger management material for sure.

Sorry, back on track here. As of Feb. 2011 we see that many large banks have made money and paid back their borrowed TARP funds, which means the government and banks have some liquidity and should be helping homeowners soon, right? Not so fast, we need to dig a little deeper and well see that the largest holders of US Treasuries are China, Japan and the UK. So that means the real benficieries of the TARP bailout were Wall Street executives, China, Japan and the UK, not US home owners or the US economy.

So what does all of that have to do with short-sales, loan modifications, foreclosures and the millions of us home owners who are still struggling to make our mortgage payments? A lot actually. First, please understand that we need the rich to make their money and spend that money in order to support and stimulate the economy. However, we also need regulations on them which benefit the middle class. For example, lending us money at 1% rate or modifying our home loans. But we simply did not get that during or after the TARP bailout, worse yet, we still cling to the dream that we will get help in the near future. Unfortunately, I just do not see it happening as Banks are not being forced to help us. They have been "asked" to help us, but are simply refusing without penalty. They are taking back homes through foreclosure in record numbers, while the Gov't scambles and spends $ billions more on useless programs that never seem to work. Worse yet, Real Estate Brokers and Attorney's across the country spent $ millions advertising help for home owners through loan modifications, but in the end took a mountain of cash for up front work that was never completed. Again, why were the loan modifications never approved you ask? Well, because the banks make more in a foreclosure or short-sale and because the Gov't simply cannot force the banks to help us, as we are a free and capitalist economy.

There are many options available to us, from moving our cash to smaller local credit unions and choosing to short-sell our homes, so that we can live to fight another day. Whatever you choose, make sure you do your homework first and Never pay cash up front for services "to be rendered" as it has historically ended poorly for the middle class.

SB1178 denied

Wish I had good news on this serene and warm October night. Nope, Schwarzenegger just vetoed SB 1178, which would have allowed home owners who refinanced their original mortgage without taking cash out, to avoid a "deficiency judgment" in California. What does this mean to the lay-person. If you took cash out of your home after you purchased it, then foreclosed or short sold that home, you are liable for a deficiency judgment in California. So basically, you owe the bank or the IRS money. Of course see your CPA for legal advice.

Since you know I am a stickler for details, let's tackle TARP, real quick. So from this interview below, you will see that the US Government only cares about themselves and their lobbyists, who pay them. Has anyone ever heard of a Congressman getting audited? Me Neither. Please listen to all of it first. For those with no time, like myself, here are the basics.

http://dailybail.com/home/and-now-a-word-from-henry-paulson-pbs-news-hour-interview-no.html


Henry Paulson, out of the graciousness of his big heart, went to congress to lend the banks $700 billion, so that they could "stabilize the credit markets and stimulate lending". So Jim Lehrer asks him in that interview, "banks have the money now and people cannot borrow money....they cannot buy a home or a car, or anything". Paulson's response,...wait for it...wait for it....the object of TARP was to make sure the banks were well capitalized". In other words, Hank wanted to give it to his buddies at 0 % so they could lend back to US at 7 + %. Mr. Paulson used to be CEO of Goldman Sachs, want to know who just happened to be on the list of the 25 largest banks to receive funds.....wow this group is smart....yep Goldman Sachs, Lehman Brothers and AIG. NO, they were not banks before TARP, but within 24 hours, sure enough they were "banks" two days later. Want to know how long it took GS to pay back $10b? They happened to have one of the biggest quarters in US stock history after TARP, so no need to guess. That is Excellent news for stock holders, but what about the executives at Goldman who received close to $242m in bonuses, salary and incentives that year? Did the US tax payer, who lent them the money receive a tax break, a bonus, or a refund? Me neither!

Well, enough bashing the big boys, nothing is going to change for us as we are all just working class fools hoping to win the lottery at this point.

So what does the veto of SB1178 have to do with us? It makes everyone of us liable, should we default on that wonderful cash out refinance. Even if you put 100% of that money into landscaping, upgrades and home improvement, you are liable to the banks and possibly the IRS for the short-fall. Thanks Governator!

If your home was a a primary residence at the time of default, you may be in luck. However, if your property was a rental property at the time of default, contact your CPA for the bad news!

Short Sale approval

Yep you are reading this correctly, we have received not 1, but 2 short sale approvals today, from none other than Bank of America. I am having a capt n coke to celebrate. These, of course were Countrywide loans, which account for oh, about 20% of all loans in the US in 2006. Whoa! Needless to say B of A has been playing clean up, but appears to have their sh*t in order. Their stock took a dive after the Merrill Lynch fiacso and the Countrywide fiasco, but they are getting back on their feet again.

So what is the secret agents? I think if you turn on your tv say after 12 pm, this information can be purchased for $19.99. HA HA! Because I am listening to Itunes Classic 80's and in a great mood I am going to spit it out for free. The key is to having your agent talking to and explaining the situation to, the decision maker. If they cannot reach him/her then escalate until it reaches them. Yesterday I made 23 phone calls, mostly to low level employees. However, eventually I was able to express my concerns to an executive level type at B of A and guess what, approval received within 8 hours. Now, why can't the other 80k B of A foreclosures (Corelogic numbers) be approved and this recession moved closer to an end? Because there are still people working at B of A who make a low wage with NO inentive to help you.

So bottom line, I have two approvals today and I have saved two families from disaster so I am going to celebrate and then get back on the horse tomorrow. There is still a lot of work to do and again I want to help every person I see or meet, because the only way out of this recession is for the middle class to take it upon their shoulders and make it happen. What do you think the rich are doing right now.......yep planning their next million!

Join them or stay committed to supporting them!

Short Sale will not get approved

So, I just posted earlier about our loan modification failure, let's just keep the positive vibe going and explain the recent rash of short-sale failures too.

First, Indym*c Bank (One W*st Bank), B of A, Ch*se and Wells F*rgo have been good to work with, so long as you NEVER refinanced your home and/or took cash out. This really only accounts for about 12% of the US population, but hey who cares, everyone is doing it right?

We have applied for, started and received approvals for 3 short sales so far. We have applied for, started and been denied on 3 short sales as well. Not bad, 50% approval, but let's dig deeper.

1. Purchase money loans in CA have a "one action rule" which means they get they home or they come after you, they cannot do both. Good for about 12% of the popluation, the other 88% percent of us are screwed.

2. For the rest of us who have "cash-out" loans, it means that once the first lender takes the home, the second lender or "cash-out" lender has to come after you personally since the first lender has the collateral (home). So, if you want to short-sell in CA then you must understand that the second lender will need a large incentive to let the home go in short-sale.

3. Not all lenders are participating and better yet, the Government has not forced any lenders to participate and truely HELP people, so there is no guarantee you will even get a loan mod, a short sale or deed in lieu of foreclosure, in the end. So, with all of the good news, what is a home owner to do? Especially one who needs to ditch a $600k boat anchor that is now worth $250k?

First, get an agent familiar with short sales. Second, do not worry about the first lender, they are in the drivers seat and will get cash or a property. It is time to schmooze the ugly girl in the back seat who is commonly referred to as the "second lien holder". They will typically ask for 20% of their lien balance in cash, at the close of escrow. USAA once asked us for 90% of the loan balance and when we said "HELL NO" they ended up foreclosing on the home owner, so be careful. If you have a private lender second, good luck they are tough! The only alternative is to have the first lender contribute cash and/or the agents each contribute cash to the second lender. However, from experience we know that first lenders only contribute $3k and an Agent will typically tell his clients that the home is not available and show them something else. That will not help bring us out of this recession, will it!

So, if you are a home owne who wants to save your credit, short-selling is your best bet. Otherwise, walk away and be prepared to have a huge hit to your credit, receive a large bill from your lender and possibly a bill from Uncle Sam as well. Always check with your CPA first for exceptions, otherwise good luck to you and your Agents it is tough out there for the middle class!

Loan Modification Failure

I am back! I have taken a 7 month haitus to work on...well my work. California has created an amazingly new and overly-complicated process for licensees to continue selling loans and real estate, so I have decided to just focus on Real Estate Sales and drop loan sales altogether. Even though I have been licensed and legit for over 7 years, the DRE and the Gov't have again created a process so complicated, only a few lucky souls will understand it and make it through. They might not be the most qualified, but they are educated in California and Federal red-tape manuevering and hats off to them.

Anyway, back in 2009 I wrote about our personal loan modification with a small company called Indy*ac Bank, who promised they could help. Well, they filed BK but were saved by the taxpayers of the US, and then that debt was purchased by a group of Billionaires for pennies on the dollar. They became One W*st Bank. I did not see any refund or interest payment from the Gov't after the sale of the bank, did you? One W*st Bank spent the better of 10 months telling me that I am perfect for a loan mod and if I would just make the reduced payments "on-time" for 3 months, that I would be approved automatically. Well after 6 months of on-time payments, they deemed my household financially sound and bammmm, NO Loan Mod! Just so happens that I made $10k that month, but $0 the two months before, but who cares right? I was so enraged that I did a search (thank you Google) and found out that they have a sweet-heart deal with the decision makers in Washington. They could make $2k on my foreclosure or $500 on a loan modification. Gee George what do you think?

Anyway be in touch with more from Indym*c, One W*est Bank and Government waste.

p.s. did you read about the corruption in Bell, California? Wow!

Loan Modification Update

OK, so I have almost completed my first loan modification! I know I promised an update months ago with a list of people to call, but it is just too massive and was a nightmare to update. Again, these modifications are not being approved on a massive scale, the banks are selectively modifying loans only for those who are very well qualified. Those with hardships, income losses or even those who are upside down on their homes will most likely end in foreclosure or bankruptcy. The Government is not demanding the banks do anything for struggling borrowers at this time, they are only recommending a solution. I even heard that B of A and Wells are sending letters to their home equity borrowers saying they are reducing their equity limits. I thought Obama represented the middle class?

Anyway, so I am working with Indymac Bank, which was recently purchased by OneWest Bank Group. They aquired the banking operations from the FDIC after they had to jump in back in 2008 when panicked clients withdrew close to $1b of cash in a 48 hour period.

Indyamc has a massive call center group, which is their first line of defense, named the loan resolution group. They have a second tier called the loss mitigation group, they are a little more knowledgeable but still bad. Finally, once the "committee" and loan investor have agreed to a modification, you are issued a special agent in charge of your file. They are in a nameless group, like the Special Forces, but most of them seem to know what they are talking about (yes when you call there is a round robin system, even though you are issued your own agent).

How do you get a loan modification approved? First, you must qualify and I do mean qualify. You must prove a source of income via tax returns, pay check stubs or profit and loss statements (self employed). Those with loss of income, etc. your denied right here. You will then sign a 4506T which ensures you are not lying to the bank. After that you must show your current monthly debts via statements (utilities, cell phone, auto, etc.) and those debts minus your gross income create a DTI (debt to income) profile for the bank. Once they have that, they will use their magical calculator to back out your debts from the gross income which leaves an "affordable" payment. They then issue a modification approval based on those numbers. Congratulations!

I know I know I left out the good parts! You will spend the better part of the 90 to 120 days submitting, re-submitting and re-re-submitting your documents to them. If you are diligent (like me) you will call daily for an update, at which time you will spend 4 minutes on hold and once an agent comes on, you will get 1 of 3 responses. 1. We got everything we are working on it, call back in 30 days (lucky you). 2. We do not have your file, please re-fax it to us (oh crap!) 3. "Oh, you need to talk to this other department as they have your file over there." That is the common response and just means, Dude! I am here for a pay check and do not give a sh*t about your circumstances. Also, best of all, if anything changes during the 90 to 120 day process, and yes I mean anything (income, debts, etc.) you are sent a denial letter.

Ok, so who qualifies for one of these mods? Those borrowers who are temporarily late on their payments, those who have an adjustable rate loan, a pay-option loan, or even an interest only loan. Also, those with a hiccup or financial hardship and it can only be a temporary hardship though. Also, those who bought a home and are now upside down.

Who do you call for a mod? Well, I have seen nothing but bad news, horror stories and rip off scams surrounding third party modification vendors, so I would say that if you are in California, the department of real estate has a list of "approved up front vendors" on their site, that is a good place to start. They charge money for these, from $1k to as much as $7k, but if it saves you $40k over the life of the loan then it is money well spent.

If you are a do-it-yourselfer then you can always go to the website of the bank or servicer that holds your loan and they will have a link or phone nunber for you to call. You can negotiate these on your own with some success, I will try to have an update soon detailing the exact process I used (assuming I am successful) and hopefully some more success stories, tips and tricks from clients who have been approved.

As always, make it happen and good luck!