California's 90 day Foreclosure Freeze

At lunch today I was listening to several people talk about California’s new foreclosure prevention act. You should have heard the people talk about how unfair this new law was! I heard words like moochers, freeloaders, bozos, crooks and the list goes on.

Why is it that every time the topic of helping homeowners comes up there is someone insinuating that the homeowners are getting something for free or they talk about how unfair it is that the homeowner is getting some sort of help.

Facing the loss of one’s home (foreclosure) has a debilitating affect on a great number of people. Thinking that they have 3 months free rent is absurd.

There is nothing “free” about facing the reality that you have no where to go (bad credit often means no rental available).

There is nothing “free” about losing a job or having your hours cut.

There is nothing “free” about closing a business you worked years to build up.

There is nothing “free” about the diminishing balance in your 401K/retirement fund.

Sure, the homeowner needs to take a share of the blame, after all they made a decision to purchase or refinance a home. But what about the banks? Aren’t they the ones who really created this mess by instituting loan products that made it too easy for people to participate? They are the ones who created a loan program that made it possible for anyone to get a loan with no financial verification which led to this financial debacle!

Was it is okay for them to securitize our loans (both credit cards and mortgages), rate them as “Triple A” then sell & resell them to the highest bidder, knowing that these type loans were destined to fail from the beginning? Shouldn’t that be considered “FRAUD”?

Why do they deserve a “pass” from our wrath? Surely everyone understands that if they had not let their greed overwhelm their logic we wouldn’t be in the economic predicament we find ourselves in today.

I say Congrats to California for taking a stand on the side of the homeowner! It may not be the cure all for this problem, but it makes the banks as least “try” to work through this problem before closing their door on a homeowner in distress.

Another Bank Bites the Dust

The latest victim of our ever increasing economic crisis is American Southern Bank.

According to government reports, we now have 26 banks that have failed this year. This total of 26 banks in FOUR months now exceeds the 25 banks that went under during 2008.

What the heck is going on?

Have we have been paying some much attention to the “big boys” of banking, Bank of America, Chase, Wells Fargo that we forgot that the regional or smaller banks need help as well?

I’m sure, if asked, our leaders would tell us that CRAP funds, oh my mistake, TARP funds are available for smaller banks as well. However, our banking regulators should be standing by each bank ready to assist them in any way possible to keep them afloat, instead of just worrying about the 19 largest banks by giving them a “stress test”, which by the way is just another way of having an excuse to give them money.

The recession (which is now in its 18^th month) has shaken our regional banks. Here’s the list of the banks that have failed so far this year;

National Bank of Commerce, Berkeley, IL

Bank of Clark County, Vancouver, WA

1st Centennial Bank, Redlands, CA

Magnet Bank, Salt Lake City, UT

Suburban Federal Savings Bank, Crofton, MD

Ocala National Bank, Ocala, FL

First Bank Financial Services, McDonough, GA

Alliance Bank, Culver City, CA

County Bank, Merced, CA

Sherman County Bank, Loup City, NE

Riverside Bank of the Gulf Coast, Cape Coral, FL

Corn Belt Bank and Trust Company, Pittsfield, IL

Pinnacle Bank of Oregon, Beaverton, OR

Silver Falls Bank, Silverton, OR

Heritage Community Bank, Glenwood, IL

Security Savings Bank, Henderson, NV

Freedom Bank of Georgia, Commerce, GA

First City Bank, Stockbridge, GA

Colorado National Bank, Colorado Springs, CO

Team Bank, National Association, Paola, KS

Omni National Bank, Atlanta, GA

Cape Fear Bank, Wilmington, NC

New Frontier Bank, Greeley, CO

American Sterling Bank, Sugar Creek, MO

Great Basin Bank of Nevada, Elko, NV

American Southern Bank, Kennesaw, GA

Heritage Bank, Farmington Hills, MI

First Bank of Beverly Hills, Calabasas, CA

First Bank of Idaho, Ketchum, ID

And now American Southern Bank.

26 banks in four months! These bank closings are approaching epidemic proportions!

Why are we bailing out the “Big” banks that, by the way, had a hand in causing this crisis and forgetting about the regional bank that deserves our help as well?

Frankly, this is beginning to look like a systematic approach to closing smaller regional banks and allowing the creation a small group of larger financial institutions.

Don’t believe me? Try Wells Fargo / Wachovia - Bank of America / Countrywide, Merrill Lynch, H&R Block Bank - Chase Bank / WMAU

Are you beginning to see a pattern?

Guess what - after the “stress test” we’re going to see more.

To see the full list of banks that have gone under please go to:

http://www.fdic.gov/bank/individual/failed/banklist.html

The Economic Plot Thickens

Today, Bank of America's CEO Kenneth Lewis said that he believed former Treasury Secretary Paulson and Fed Chairman Bernanke wanted him to "keep quiet" about the worsening terms of the bank's acquisition of Merrill Lynch comes to no surprize to me.

What we have here is just another example of the "let's take care of my friends" game that has been played and continues to be played by the good ole boys on Wall Street.

Lewis claims that Paulson and Bernanke warned him that failing to complete the Merrill Lynch takeover would "impose a big risk to the financial system". Has anyone explained why? Why Merrill Lynch and not Lehman Brothers? Surely both companies deserved to be saved, didn't they?

BofA had already received 25 billion from the TARP funds. In order to complete the deal for Merrill, BofA received 20 billion more.... before completing the deal for Merrill, didn't Kenneth Lewis read the financial statements of the company?

Or was he so worried about acquiring another "prized" bull, (remember Countrywide?), that he turned a blind eye!

Now he's pointing fingers! HA! He's acting like the kid who caught with his hand in the cookie jar, blaming everyone but himself for the debacle his company is involved in.

Mr. Lewis, I think it's time for you to take an Ethics class. You would probably not be visiting the Attorney General's office under these circumstances if you had remember the old adage "all that glitters is not gold".

Judge Stops Bank's Foreclosure Action

On March 6, 2009 a Florida Jurist, Judge Donna Berlin slammed the foreclosure door on Washington Mutual Bank in a mortgage foreclosure case.

Judge Berlin issued an order Canceling Foreclosure Sale and Enjoining Plaintiff from Applying for Sale Date. In this case, it seems that the homeowner was working with WAMU trying to get a loan modification for her mortgage. Unfortunately, WAMU was moving the foreclosure process forward through the court system.

Because the homeowner was talking with WAMU’s home retention dept. it appears that she didn’t take the appropriate actions in the Court to defend herself because of the ongoing loan modification negotiations. But why would she? She was convinced that “her bank” would work with her.

Just a month before on February 6, 2009, the Judge entered an order on February 6, 2009 setting aside a final judgment of foreclosure because of excusable neglect.

Despite that the foreclosure judgment was set aside, it appears that the company representing WAMU went ahead and asked to set a sale date and received a sale date of March 30, 2009. Bear in mind that there is no final judgment at this point.

Judge Berlin gets it! The Judge stopped WAMU from applying for another sale date until they receive a final judgment from the Court.

Over and over again we hear of stories where the bank has played “games” with homeowners who are either in the middle of a loan modification or in the middle of a “short sale” negotiation.

This recession is causing enough problems in this economy without the banks taking back houses every chance they get. When are the banks going to realize that most homeowners WANT to stay in their homes? WAMU boycott the recession with us by helping homeowners stay in their homes!

Homeowners let this story serve as an example of what you shouldn’t do! Do not assume that your mortgage company is working 100% on your behalf. Be mindful that the clock continues to tick on the foreclosure process. If you have a question on the foreclosure process in the state you live in, call your neighborhood housing agency, your local realtor or an Attorney.

And remember to help us Boycott the Recession by helping other homeowners stay in their homes.

Talk to you soon!

You can join us in boycotting this recession by going to www.BoycottTheRecession.org

The Effect of the $700 Billion Bailout on the Homeowner

When last we met I was asking "Where is the Help for the Homeowners?

Today I want to talk about the:

$700 billion dollar bailout and the effect it is going to have on the homeowner.

First, let's recap the bailout plan

The program calls for our government to spend "up to" $700 billion dollars to buy distress mortgages from ailing banks.

This is in addition to:
> The $85 billion dollar agreement for the bailout of American International Group (AIG)
> The $29 Billion dollars for the government back deal that allowed JP Morgan Chase to acquire
Bear Stearns
> The $25 billion dollar government acquisition of Fannie Mae & Freddie Mac.

The Program is supposed to:

Attack the Credit Crisis: It allows the Treasury access to the $700 billion in stages. With $250 Billion made available immediately.

Protect Taxpayers: The bill requires 1) the financial industry to reimburse taxpayers for any net losses from the program after five years. And 2) the Treasury will be allowed to take ownership stakes in participating companies.

Curb Executive Pay: The law will place curbs on executive pay for companies selling assets or buying insurance from Uncle Sam.

Provide Oversight: The rescue plan will set up two oversight committees. A Financial Stability Board will include the Federal Reserve chairman, the Securities and Exchange Commission chairman, the Federal Home Finance Agency director, the Housing and Urban Development secretary and the Treasury secretary.

Provide Tax Breaks: It extends a number of renewable energy tax breaks for individuals and businesses, including a deduction for the purchase of solar panels.

The law also continues a host of other expiring tax breaks. Among them: the research and development credit for businesses and the credit that allows individuals to deduct state and local sales taxes on their federal returns.

In addition, the law includes relief for another year from the Alternative Minimum Tax, without which millions of Americans would have to pay the so-called "income tax for the wealthy."

Require New Accounting Rules: The bailout plan underlines the Securities and Exchange Commission's power to change accounting rules on how banks and Wall Street firms value securities, and directs the agency to study the issue.

Shield Bank Deposits: The law temporarily raises the FDIC insurance cap to $250,000 from $100,000. It allows the FDIC to borrow from the Treasury to cover any losses that might occur as a result of the higher insurance limit.

The plan will also temporarily increase the level of federal insurance for credit union savings to $250,000.

Mitigate Foreclosures: The program calls on federal agencies to encourage loan servicers to modify mortgages by a number of means - including reducing the principal or interest rate.

It also extends a temporary provision that exempts from federal income tax any debt forgiven by a bank to a borrower in a foreclosure.

Cost: The Congressional Budget Office said it cannot estimate the net budget effects of the troubled asset program because of the many unknowns about that piece of the bill. However, the agency noted in a letter to lawmakers that it expects the program "would entail some net budget cost" but that it would be "substantially smaller than $700 billion."

Overall, the CBO said, "the bill as a whole would increase the budget deficit over the next decade."

So there it is, this is what $700 billion dollars gets us! A major investment in Multi-National companies and an America deeper in debt!

BUT WHAT ABOUT THE HOMEOWNER?

The bill calls on federal agencies to "ENCOURAGE" loan servicers to modify mortgages by a number of means - including reducing the principal or interest rate.

This is a joke! Let me get this straight, the federal government is giving money to "bailout" our financial institutions and in exchange all the financial institutions have to do is "MAYBE" help the homeowner?

Well, what is your definition of ENCOURAGE?

When this bill was first announced I spoke out against it in a meeting of concern homeowners in Riverside, CA. My reasoning then was simple "if they give money to the banks to buy their distressed mortgages, then the banks will not negotiate with the homeowners and their realtors in good faith!"

And why should they? The banks will be able to recover the full amount of the loss instead of just a portion!

The banks have begun to prove my point - let me provide an example:

We submitted a short sale package to a well known bank in early August 2008 (prior to the bailout). We called to verify that the bank had received the package and was informed that they had. When asked how long the process would take the bank rep told me approx 45 days.

I called back 1 week later for an update and was told that the file had been assigned to a negotiator. Great, I said to myself, this bank (who is normally difficult to work with), is really on the ball!

30 days later, after numerous calls to the negotiator and customer service, I was told to re submit the short sale package, because they couldn't find it. No problem this is normal! I sent the package in as requested. I try to call the negotiator but can't reach him. I leave message after message.

It's now October and I'm continuing my pursuit of the elusive negotiator, when I'm told that my file had been reassigned! 60 days into the deal! Wow!

Late October, I'm asked again to provide ALL of the information I sent back in August & September, which of course I do. And yes I verified that they received it.

November goes by and on or about December 19th 2008 after numerous calls to the bank, I receive a call from from customer service who tells me that the short sale package has been turned down! 120 days after we started!

I ask "why" and the CS rep says "the notes here say that the amount offered for the house does not meet INSURANCE GUIDELINES"

"What insurance guidelines?" I ask. The CS rep tell me that he doesn’t know what that means, he's only going by what is on the computer screen. I get it - Turned down with no explanation.

I have tried to speak to the negotiator numerous times since, but he will not return my calls.

Insurance guidelines - I'm sure they're speaking of the company that provided the mortgage insurance for the loan.

What this bank doesn't know is that I've had the pleasure of actually speaking with the Mortgage Insurance Company regarding this loan earlier in the deal and told me they rather have the property sold because if the property was foreclosed on, they would have to pay an insurance claim!

You see, now that we've given the banks an opportunity to dump all of their distressed mortgages, the banks no longer have any reason to negotiate with the homeowner in good faith!

I had another bank rep tell me, earlier this fall, "if the homeowner doesn't like the deal I've given, then we'll just take the house back!"

Another closed the file in the middle of negotiations because the homeowner didn't send back the form that okayed the deal the bank wanted to have approved! Again, right in the middle of negotiations!

Over and over again, I hear stories about how the banks are unwilling to negotiate with sellers, take their time working on Short Sale packages and generally being difficult to work with.

This is why I say we must not give to the banks unless they are willing to actually help the homeowner in distress!

The bail out plan does absolutely NOTHING for the homeowner! Yet, it is the homeowner who needs the most help.

By the way, why is it that the banks don't have to show their financials or provide their credit rating?

When we try to get a loan don't we?

Frankly, I am in favor of helping to stabilize our nation's financial institutions. But why is it the banks are able to receive funds to help them get back on firm footing and all the fed can do is "ENCOURAGE" the banks to help the homeowner?

Something doesn't fit does it?

We must "ENCOURAGE" our leaders to strengthen the Emergency Economic Stabilization Act of 2008 to include the following:

"Any financial institution who receives money from this program "MUST" modify all homeowner loans in distress"

We should not give money to the financial institutions without something in return for the American Homeowner and for the Small Business Owner.

And that's our next subject!

The importance of Small Businesses and why we need to support them!

Here's wishing you "Nothing but the Best!"

Where is the Help for the Homeowners?

Earlier this month, during a panel discussion with OTS Director John Reich, Federal Reserve Board Vice Chairman Donald Kohn, FDIC Chairman Sheila Bair, and Federal Housing Finance Agency Director James Lockhart, the Comptroller of the Currency John C. Dugan said "that new data shows that more than half of loans modified in the first quarter of 2008 fell delinquent within six months."

He went on to say that “After three months, nearly 36 percent of the borrowers had re-defaulted by being more than 30 days past due. After six months, the rate was nearly 53 percent, and after eight months, 58 percent,”

A key question, Mr. Dugan said, is why is the number of re-defaults so high? “Is it because the modifications did not reduce monthly payments enough to be truly affordable to the borrowers? Is it because consumers replaced lower mortgage payments with increased credit card debt? Is it because the mortgages were so badly underwritten that the borrowers simply could not afford them, even with reduced monthly payments? Or is it a combination of these and other factors?”

Let's discuss this, shall we?

Question 1 - Is it because the modifications did not reduce monthly payments enough to be truly affordable to the borrowers?

Answer: YES! When providing modifications for the homeowners the banks do not make their decisions based on what the homeowner can afford, but instead their decisions seem to be based on the amount owed on the loan. Most banks are unwilling to budge for the homeowner and will even close the file after making a modification offer, if the homeowner takes to long (as little as 72 hours) to make a decision.

Question 2: Is it because consumers replaced lower mortgage payments with increased credit card debt?

Answer: Very possible - especially in the cases of "teaser" rate loans. We find that the providers of these loans qualified the borrower only at the beginning interest rate and failed to qualify the borrower at the "real" rate.

This failure often make the unsophisticated borrower feel that they have more latitude in terms of disposable income and who subsequently made purchases based on today's monthly payment totals instead of making purchases based on the adjusting loan balance.

Question 3: Is it because the mortgages were so badly underwritten that the borrowers simply could not afford them, even with reduced monthly payments?

Answer: The failure of the mortgage providers to properly look at the applicant's paperwork is a big part of this problem. The stated income program was at first one of the greatest lending programs I have ever seen in my 20 year real estate career. This program allowed self employed people finally get a chance to purchase a home without having to explain why there 1040's only showed little or no income (line 36).

The problem with programs like these is that everybody decided to use it to get their client a loan (and rightfully so). However, when it was credit driven, meaning your score had to be above a certain level, everything was running smoother. Then one day, the mortgage provider relaxed their guidelines and reduced the requirements.

All of a sudden EVERYBODY was getting a home loan or refinancing their existing home. It was like the Wild, Wild West out in Real Estate land! The folks who wouldn't normally qualify for a loan are now homeowners! This in itself is not bad, but unfortunately the mortgage providers should have underwritten these loans better.

Question 4 - Or is it a combination of these and other factors?”

Answer: There is another factor I want to bring forward. Loan's with one hundred percent (100%) financing. It was okay for this program to have been released. But shouldn't the mortgage providers insist that anyone who accepted this loan must first go to some sort of financial responsibility class?

I know, hindsight is One Hundred percent (100%)! However, they should at least have made sure first time buyers or people with credit scores under 650 attended this type of class.

Now that we've answered these questions I want to make an observation.

Why are we talking about loan modifications in terms of failure?

Shouldn't we instead be questioning the banks about why they are not doing more to help the homeowners in distress?

Didn't the banks get a bailout package?

Why isn't anyone we asking them to share the bailout package with the homeowners in distress?

In my next submission, I'm going to talk about the Bank Bail-Out Plan & the possible affects it may have on homeowners!

Did the Recession Affect Your Christmas Like it Did Mine?

No matter where you live in this country, whatever your economic status or the type of work you do, you are either being affected by this current recession or you know someone who is. Americans (we, the people), all over this great nation are losing their homes, losing their jobs, losing their hope and are feeling powerless because of this crisis.

With all the foreclosures, all the failed banks, huge investment firms closing and with credit tightening, our economy is in crisis! There is plenty of blame going around. The Democrats blame the Republicans and vice versa, the Feds blame the mortgage companies, the lenders blame the homeowners.

Our leaders don’t seem to have the answers necessary to stem the tide. Big bucks are being passed around Washington that help the large corporations that, frankly, helped cause these problems in the first place.

Next to nothing is being done to help the little guy, you and me.

So, what CAN be done? First, to take back our economy, we need to leave the blame game to the talking heads. We can continue to listen to them and place our hopes in Washington politicians, wringing our hands and continue to feel powerless – OR we can choose not to participate, take matters into our own hands and . . . . .

BOYCOTT THE RECESSION!

Recession is money not moving. Lowered sales create slowed production, which causes jobs to be lost, so families have less to spend, which then keeps dollars dormant and not circulating. It’s a vicious cycle that can only be stopped by intelligent intervention.

Our Government may not have gotten it right when they sent out stimulus checks to the entire population, but stopping spending isn’t the answer either.

It seems counter-intuitive, but the very last thing we should be doing when money flow starts to slow is to stop spending our money. The only remedy for a recession is to get cash flowing in our economy again. It’s up to the American consumer to control this recession – and don’t think for a moment that we cannot!

Alice Walker (author of “The Color Purple”) once said, “The most common way people give up their power is by thinking they don’t have any.”

The day has come when we, the people, have to take a stand. We didn’t start this. But we can help ourselves and help each other end it by moving our money more wisely.

It has become clear that our leaders don’t really know exactly what to do to handle this recession.

We, the people, must take matters into our own hands.

Are YOU ready to put an end to the recession? Are you ready to do your part to become financially secure? I AM! That's why I've decided NOT to participate in this recession!

And I want YOU to join me!

Together we can BOYCOTT THE RECESSION and PROSPER

It doesn’t take much on your part to participate and lend your support. And it costs you nothing to join. You can learn more about the BOYCOTT THE RECESSION at

http://BoycottTheRecession.org.

Listen to us on the internet every Wednesday at www.blogtalkradio.com/mr-boycott

Do your part. Go there now and join us. Then tell everyone you know about how they can participate by sharing this blog & radio show with all your friends, family, and fellow workers.