Foreclosure ethics alert from the California State Bar | Feldman Law Center

When a San Diego attorney was asked recently if he wanted to associate with a loan modification company offering stop foreclosure and loan modification services, he saw red flags. During a loan mod seminar he was approached by several others, he expressed concern about potential ethical constraints, such as splitting fees with non-lawyers and soliciting clients, but “they tried to explain some easy loopholes. With only being out of Law School a couple of years and trying to pay off student loans as well as other debt the temptation was there but the risk seemed too great. After consulting with both the Department of Real Estate and the State Bar’s Ethics Hotline, the decision was made to decline the multiple offers.


“It seems to be the flavor of the month” says Steven C. Feldman with the Feldman Law Center. Attorney based and attorney backed loan modification attorneys are popping up and closing down at a record pace in California. Many ex mortgage brokers want to avoid the DRE’s advance fee agreement while still possessing the salability of having an attorney on staff. In most circumstances…it’s all smoke and mirrors. Several attorneys have their name attached to multiple loan modification companies and while an attorney can be counsel for several companies this is not what’s really happening. The intention is to add credibility to the loan modification company and to collect upfront fees from homeowners facing foreclosure. Since Steven C. Feldman opened the Feldman Law Center over a year ago there have been many been many imitators providing stop foreclosure and loan modification services. Many attorneys have contacted the State Bar for ethics advice that its professional responsibility committee issued an alert last month offering guidance to lawyers thinking about signing up. “The most important thing is for lawyers to understand this area is fraught with danger from an ethics point of view,” said Jon Rewinski, a Los Angeles litigator who drafted the ethics alert.

California law specifically addresses foreclosure consultants and restricts their activities; among other things, they are prohibited from collecting upfront fees for their work. However, because attorneys are permitted to accept advance fees, they are in demand by some loan modification businesses. (Licensed brokers also may accept advance fees under certain circumstances.) Although the Brokers may collect up front monies with an approved DRE advance fee agreement… what happens when the property goes into foreclosure and the client is in REAL jeopardy of losing their home to a trustee sale?. These are the instances where home owners need an attorney that works for them, not a front for a loan modification company. The relationship between Mortgage Brokers and Attorneys can be a lucrative one, with some Brokers paying the attorney as much as $500.00 per file just to use their name. In one instance there was a police report filed against an attorney for destroying a broker’s office and attacking the staff for using his name while making false statements.” Many of these loan mod companies have a higher turnover in attorneys than they did with loan officers from the subprime lending days” says a Broker that asked to remain anonymous.

According to the alert, posted on the California State Bar’s home page (calbar.ca.gov), “There is evidence that foreclosure consultants may be attempting to avoid the statutory prohibition on collecting a fee before any services have been rendered by having a lawyer work with them in foreclosure consultations.”

The alert goes on to list a series of ethics rules prohibiting lawyers from:

- paying a referral or marketing fee to a foreclosure consultant or other person for referring distressed homeowners to the lawyer;

- directly or indirectly splitting fees earned from a distressed homeowner client with the foreclosure consultant or any other non-lawyer;

- aiding a foreclosure consultant or anyone else in the unauthorized practice of law or forming a partnership or joint venture with a foreclosure consultant or other non-lawyer if any of its activities would involve providing legal services;

- contacting in person or by telephone a distressed homeowner referred by a foreclosure consultant or someone else unless the lawyer has a family or prior professional relationship with the homeowner;

- filing a lawsuit without good cause or motions in a lawsuit that are simply intended to delay or impede a foreclosure sale; and

- Failing to perform legal services with competence.

The alert also describes a series of scenarios that may land lawyers in legal hot water. For example, a non-lawyer may offer a large number of referrals and a promise of easy money; may request that the lawyer pay a referral or marketing fee; or may ask a lawyer to enter into a joint venture with a distressed homeowner and the consultant. Much of this conduct violates the Rules of Professional Conduct, the alert warns. Many websites, T.V. and radio commercials by loan modification companies are steering clients to an attorney. This is illegal, but has become a common practice. There is a new website set up to help homeowners get information on loan modification programs and find legitimate sources for loan modifications called www.loanmodificationhelpcenter.org . A home owner facing foreclosure may choose to work directly with their lender but in most cases this fails. Hiring an attorney to stop foreclosure or provide loan modification services will cost $3,000 to $5,000 but the results may be well worth it. Most home owners are declined when attempting to modify their loan without assistance.

The bar’s Ethics Hotline, a free confidential research service for attorneys, has been receiving between one and two dozen calls a day for the last six months dealing with the residential mortgage crisis and loan modification — about 15 to 25 percent of its daily call volume.

Scott Drexel, the bar’s chief prosecutor, says that for the last three months, the bar has received 50 complaints each day — about 950 complaints a month — about lawyers involved in some way with the foreclosure crisis. While the complaints run the gamut, Drexel said the most common concerns lawyers who lend their name to a loan modification operation but non-lawyers do most of the work. The non-lawyers get fees upfront through the lawyer and either do not complete the modification or do it incompetently. As a result, he said, the client loses his or her money.

Calling the number of complaints “shockingly high,” Drexel said his office is “quite concerned. We’re especially concerned with attorneys allowing their names to be used by non-attorneys in some of these loan modification schemes or scams.” There have been several loan modification scams set up by non attorneys that unknowingly involve a new or retired attorney not knowing any better or worse yet involved with at the highest level. Many of these loan modification companies go to the extreme of using words like legal, law, attorney in their company name and advertising. “We see it all the time” says Feldman, who has suffered from having unscrupulous attorneys and loan mod companies impersonating unhappy clients on the internet claiming they were scammed by the Feldman law Center. Feldman goes on to say “we have had hundreds of clients come to us after they have been scammed by a loan modification or stop foreclosure company. When you hire an attorney you get legal advice and legal representation which this is not the case with these other companies. Home owners stuck in a financial nightmare need good, solid legal advice. They need to know all of their options in avoiding foreclosure and/or what to expect during the foreclosure process.

The Department of Real Estate reports complaints about lawyers involved in loan modification programs who act as fronts or work in-house. “We’re not certain if they are practicing law or just lending their names,” said chief counsel Wayne Bell.

The department has no jurisdiction over lawyers but can issue cease and desist orders against unlicensed people who operate as real estate licensees who violate real the law.
A licensee can collect advance fees before a notice of default is recorded if he or she has received a “no object” letter from the DRE. Such a letter is issued after a licensee submits an advance fee agreement, accounting format and any advertising or promotional materials for review. But the letter does not mean the department endorses a particular service. In addition, most loan modification scams start with a mail offer or a telemarketer making fraudulent claims or posing as their lender and or stating they were assigned by their lender to provide a loan modification and request all the home owners’ personal and financial information.

The Department of Real Estate also has posted a consumer alert on its Web site (dre.ca.gov) warning homeowners to beware of individuals or companies that offer to help work out a loan modification with lenders or provide other services that protect against foreclosure. The department is part of task forces operating in northern and southern California with county, state and federal prosecutors looking at loan modification efforts that cross the line into foreclosure scams. This is a good reason for struggling home owners to hire an attorney that has his name on the door. There are several in California that are reputable and have been providing loan modification services for over a year now. Steven C. Feldman, Timothy Mc Farlin and Greg Pavia were the first on the scene and now attorneys are surfacing on the internet, newspaper and radio at a record pace offering loan modifications.

Rewinski said the bar’s alert is not meant to suggest that distressed homeowners are not entitled to legal counsel; on the contrary, they may well need legal help and lawyers should be able to assist them. “Distressed homeowners should seek legal advice as one of their options,” he said. “There are pro bono resources and, of course, lawyers who will help on a paid basis.”
Bell agreed that many lawyers are legitimately helping clients with foreclosure and other credit issues. “If they are helping a client, engaged in providing professional services, that’s within their purview,” he said. “If they’re accepting fees and sharing those moneys with non-lawyers, you have all the problems this ethics alert deals with.” The main questions, he added, are “Is the lawyer really actually performing legal services, is the lawyer bringing his or her professional skills and abilities to assist the client, and are they actually having face-to-face meetings with clients?”

Bell said when consumers who are in desperate financial straits see the word lawyer, “they somehow believe they’re going to get a higher level of care.” For the lawyer, he added, “the question becomes, if I lend my name to loan modification company, am I adding any value?”

Home owners facing the threat of foreclosure should have the ability to meet or speak directly to the attorney handling their case. If not, then the attorney/law office is no more than a foreclosure consultant and one should consider searching further for a law firm that will offer a face to face meeting with the attorney. For more information please call us at (800) 588-0425 or visit http://www.feldmanlawcenter.com/

MORTGAGE LITIGATION UNDER THE FEDERAL TRUTH IN LENDING ACT | Feldman Law Center

In many cases we have found violations with refinance and purchase loans made between 2003-2007. It's important to know as do the lenders it is possible for a borrower in foreclosure to keep possession of their property without making mortgage payments for a period of time due to violations of Federal Law by the mortgage company.

The Truth in Lending Act ("TILA") and the Real Estate Settlement Procedures Act ("RESPA") are violated daily by lenders and mortgage companies. These loss mitigation laws are in place to protect you, the homeowner, but they are often completely disregarded. Your loan is probably unlawful, and you may be entitled to substantial damages whether or not you're currently in foreclosure.

Not only can the Truth in Lending Act be used to immediately stop the foreclosure process (if you currently are in foreclosure), but it also lets you avoid bankruptcy and it puts money in your pocket. Once TILA and/or RESPA violations are discovered in your loan documents, your lender will be eager to discontinue the unlawful foreclosure process and settle the dispute. In some cases a simple call to the mortgage servicer

The Federal Truth in Lending Act is a very specialized area of law, and only a few attorneys in the country are able to take on mortgage companies in this regard. Feldman Law Center is working to expand the program, but we currently can only help qualifying homeowners in California to avoid foreclosure.

Most loans (especially those in foreclosure) will qualify for our program, but time is critical. We need time to fully analyze and evaluate your mortgage documents and then prepare the file for negotiation or refer for litigation. Here is an overview of how our program works:
We scrutinize the mortgage documents you received upon the closing of your loans(s) and look for TILA, RESPA and/or HOEPA violations by your lender. Nearly every loan has at least some violations.

We immediately notify the lender and request a loan modification or notice of our intent to file a Federal lawsuit on your behalf, and place a Lis Pendens on the property to stop foreclosure (if applicable) and begin litigating your causes of action against the lender(s).
We reach a settlement agreement with the lender (most cases) or continue on to trial (rare situations) and demonstrate to a judge or jury how the lender has willfully failed to comply with Federal Law.

It is NOT necessary for you to make mortgage payments while the lawsuit is pending.
It is also unlawful for the lender to report negative information about you to the Credit Reporting Agencies while the lawsuit is pending under the Fair Credit Reporting Act.
Our program is also affordable; we represent you on a hybrid contingency arrangement to keep out-of-pocket costs low.

General Information about TILA: Truth in Lending Act (15 U.S.C. §§ 1601-1667f, as amended)
The federal Truth In Lending Act was originally enacted by Congress in 1968 as a part of the Consumer Protection Act. The law is designed to protect consumers in credit transactions by requiring clear disclosure of key terms of the lending arrangement and all costs. The Truth In Lending Act is designed to reduce confusion among consumers resulting from the different methods of computing interest and prevent fraud, deception and unfair business practices. It does not require creditors to calculate their credit charges in any particular way. However, whatever alternative they use, they must disclose certain basic information so that the consumer can understand exactly what the credit costs. The Truth in Lending Act is implemented by the Federal Reserve Board.

Regulation Z explains that lenders must comply with the consumer credit parts of the law.

Regulation Z applies to offers or extensions of consumer credit if four conditions are met:

1. The credit is offered to consumers.

2. Credit is offered on a regular basis.

3. The credit is subject to a finance charge (i.e. interest) or must be paid in more than four installments according to a written agreement.

4. The credit is primarily for personal, family or household purposes.
If credit is extended to business, commercial or agricultural purposes, Regulation Z does not apply.

Home Mortgages

One of the biggest lending transactions any individual is likely to enter is borrowing to purchase a home. These transactions have become more complicated in recent years. Historically, someone trying to buy a home had very few options. Often, only a traditional thirty year loan was available. Now, loans of various duration and interest rate variations are available to every home buyer. The Federal Reserve Board and the Federal Home Loan Bank Board have published a book entitled "Consumer Handbook on Adjustable Rate Mortgages " to help consumers understand the purpose and uses of adjustable rate mortgage loans. Regulation Z requires that creditors offering adjustable rate mortgage loans make a special disclosure booklet available to consumers.

Disclosures

Disclosure is generally required before credit is extended. In certain cases, it must also be made in periodic billing statements. The term "closed end credit transaction" is defined by exclusion. That is, it includes any credit arrangement (either a consumer loan or credit sale) that does not fall within the definition of an "open end credit transaction". Open end credit includes credit arrangements like revolving credit cards, where the "borrower" (that is the credit card holder) is not required to pay off the principal amount by any particular point in time. Rather, the borrower is simply charged interest periodically and is usually required only to make some minimum payment.

Under Regulation Z, disclosure must be made of the following important credit terms:

1. Finance Charge - This is perhaps the most important disclosure made. This is the amount charged to the consumer for the credit.

2. Annual Percentage Rate - This is the measure of the cost of the credit which must be disclosed on a yearly basis. The method for calculating this rate is determined the underlying transaction.

3. Amount Financed - This amount that is being borrowed in a consumer loan transaction, or the amount of the sale price in a credit sale.

4. Total of Payments - This includes the total amount of the periodic payments by the borrower/buyer.

5. Total Sales Price - This is the total cost of the purchase on credit, including the down payment and periodic payments.

6. Evidence of compliance with the Truth In Lending requirements must be retained for at least two years after the date of disclosure. Disclosures must be clear and conspicuous and must appear on a document that the consumer may keep.

The Truth In Lending Act has other important features. If you elect to advertise credit terms, the law requires disclosure of key lending terms. Also, the law entitles the consumer the right to rescind certain credit transactions under certain circumstances, such as home equity loans.
The penalties for failure to comply with the Truth In Lending Act can be substantial. A creditor who violates the disclosure requirements may be sued for twice the amount of the total finance charge on the loan. In the case of a home mortgage, this can be a very significant amount. Costs and attorneys fees may also be awarded to the consumer. A lawsuit must sbe begun by the consumer within a year of the violation, but certain tolling provisions apply giving the consumer more time.

Feldman Law Center would be happy to review your loan documents and discuss TILA or RESPA litigation options as well as other alternatives to help stop foreclosure. For more information please call us at (800) 588-0425 or visit http://www.feldmanlawcenter.com/

Feldman Law Center - Me and My Loan Mod

What is a loan modification? How long do they take? Are they guaranteed? These are the questions I intend to answer. As I am sure of it, most homeowner's are familiar with the current mortgage crisis that has struck the United States. Those very same people have families, or count on the property for rental income. Whatever the case may be, if you are unable to pay your mortgage due to life's unexpected twists and turns; a loan modification may be able to help you keep your home. First things first, what is a loan modification?

Loan modification – negotiations with your servicer/lender in the areas of and not limited to: reduced monthly payment, reduced monthly interest-rate, recapitalization of arrears and having your loan brought current; thus avoiding foreclosure.

The core requirement of achieving a modification is knowledge of the lender's guidelines. Who should you trust when it comes to a loan modification? There are dozens of loan modification or “mod shops” as they call themselves. However in order to protect yourself from being preyed upon by opportunists, always use a law firm. A law firm which specializes in modifications will be able to achieve a loan modification more successfully than a traditional modification company. It also ensures that clients of the law firm receive their due diligence since an actual lawyer's license is on the line. When it comes down to loan modifications you can expect a completely different type of business. A law firm will have properly filed documentation, as well as in-house lawyers that provide legal counsel to their firm. But back to how long they take:

How long do they take? - Because lenders are so extremely back logged due to the mortgage crisis the usual time line for a loan modification is above 60 days. There are exceptions however as how long your modification takes is correlated to the number of days you are delinquent. In order to get the best estimate contact a loan modification law firm.

The most important goal of a homeowner in distress is to make the next few decisions in their lives as “correctly” as possible. In choosing a loan modification company make sure the company is run by an actual Lawyer. The Feldman Law Center, for example is a law firm that specializes in loan modifications. When dealing with an actual law firm you will gain the legal knowledge that comes with operating a law firm. In addition, the foreclosure process is a legal process; and therefore trusting a law firm is the smartest move you could make.

Sitting back and hoping that the government will step in with a mortgage bailout in our current environment is not a wise choice. By looking into a law firm that specializes in loan modifications you are taking your first step towards getting a successful loan modification. My last piece of advice would be to contact your local modification law firm as soon as you feel you can no longer afford your home. A good company should have a proven track record, lawyer(s) in-house and experience in working with a wide variety of servicers/lenders. By being proactive you decrease your chances of being foreclosed upon and avoid losing your home. Thank you very much for joining me in this brief loan modification summary. For more information please call us at (800) 588-0425 or visit www.feldmanlawcenter.com

The United States needs loan modifications - Feldman Law Center

According to a recent Gallup Poll, over 50% of Americans feel that offering government aide (mortgage bailout) to homeowners in distress is unfair1. My fellow Americans, it seems as if in this hard time we are hard-pressed to find support from others in more fortunate situations. In fact the same source also outlined that according to America, only 6% of Americans feel that the government's aide will even have a substantial effect on the mortgage crisis2. The fact of the matter is that often times hardworking citizens find themselves in times of hardship. You may be one of the homeowners with children, dreams and lives that revolve around your precious home. You may also be a multiple home owner, homes that you have earned through years of hard work. With Americans weary of government assistance, what can homeowners do?

Homeowners have the right to defend themselves against lenders; often times in order to stay in one's home an individual must take the initiative. During any crisis those who act proactively have historically been the most successful. This is true for any financial investment as well. Albeit, the home for many homeowners is much more than an investment. The reality of the situation is that in order to keep your property, homeowners should not sit and wait for help. Homeowners are now turning to loan modifications as a means of survival. A loan modification is by far the most effective and economically sound decision a homeowner can make. What is a loan modification? A loan modification is a relatively new option that many homeowners are using to keep their properties. As other options are less effective and can cost homeowners much more money. In this current economy smart decisions need to be deciphered and executed in an expedited manner.

The main objective of a loan modification is to offer a homeowner payment relief, this comes in the form of a lowered monthly payment as well as, and not limited to; a lowered interest-rate, reduced principle balance and deferred payments. A loan modification will also recapitalize the arrears; what this means for you as a homeowner is that a successful loan modification will take what ever past due(s) you owe and put it back into the principle. Ultimately the goal of a loan modification is to keep what you own, to further ensure that you keep your property a loan modification will also typically offer an interest only option or fix and fully amortize your loan. Other benefits of a loan modification include; no credit score requirements will stops foreclosures and will bring a homeowner completely current.

How can a homeowner obtain a loan modification? In order to obtain a loan modification a homeowner must know exactly what to do and/or say to their lender. As many inexperienced homeowners will tell you, a loan modification is not a very easy or simple task. It takes hours upon hours of work as well as a fundamental understanding of what lenders are looking for when approving loan modification. Thus, homeowners’ best opportunities lie with an experienced loan modification company. Because of the large number of unscrupulous loan modification companies currently operating, a homeowner's best shot at a loan modification is through a law firm. This is the case because a lawyer must actually put their license on the line; this ensures legitimacy. A law firm will offer legal expertise as well as the modification experience required to successfully negotiator a loan modification. For more information on keeping your home visit www.FeldmanLawCenter.com or call us at (800) 588-0425.

Feldman Law Center Unafraid to Make Enemies of Lenders

If given the chance, banks would foreclose on the Playboy Mansion, the White House, and Disney’s Sleeping Beauty Castle. America’s most famous landmarks would be sold at public auction because some unreasonable mortgage companies would be unwilling to offer assistance. Make no mistake, lenders aren’t your friends. Even beloved TV legend Ed McMahon couldn’t avoid foreclosure.

From famous celebrities to average homeowners, the housing crisis has impacted the lives of every cross-section of America. US News reports that home prices have dropped 21 percent from their 2006 peak prices. To make matters worse, investment firm Goldman Sachs predicts the unemployment rate reaching 9 percent by the end of this year, prolonging the widespread mortgage woes. As economist Nigel Gault describes, “Household wealth continues to fall rapidly, employment is falling steeply, and consumer sentiment is at or near all-time lows.”

It’s getting ugly out there, and during these troubling economic times, many struggling families are asking, “who’s looking out for us?”

If only Ed McMahon had contacted Feldman Law Center, the Tonight Show sidekick wouldn’t have had to find an ominous notice of default waiting in his mailbox. Firms like the Feldman Law Center have been helping homeowners across the country avoid foreclosure by modifying their loans. They may have been able to modify McMahon’s $4.8 million loan by reducing his interest rate and capitalizing his $644,000 of arrearages.

Loan modifications have allowed many people to stay in their homes. By negotiating modified loan terms, homeowners have been able to afford the roof over their heads for many more years to come. It is a hopeful alternative to losing one’s home completely, and no one wants to put their American Dream through a short-sale.

Attorney Steven Feldman, founder of the Feldman Law Center, brings over 25 years of legal experience to the firm. He also brings boldness and warrior-like aggressiveness to the front line of the foreclosure fight, which his staff has gladly inherited from him. Feldman simply isn’t ashamed of getting mean with mortgage companies. In fact, he and his team take pride in forcefully reminding lenders that foreclosure should not be an option. “The banks can often get lost in their own ineptness, and we really don’t mind setting them straight by negotiating a loan modification,” said Feldman. “We aren’t here to make friends; we are here to save homes.”

While the nation looks to the government for assistance, many have already found hope in places like Feldman Law Center. Though the loan modification process can be lengthy, members of Feldman’s team have provided confidence to struggling homeowners that cannot seem to find it anywhere else.

As one Los Angeles homeowner and Feldman Law Center client said, “When describing Feldman Law Center, one word comes to mind: fearless.” For more information please call us at (800) 588-0425 or visit www.feldmanlawcenter.com

About Feldman Law Center

The Feldman Law Center was founded for the purpose of negotiating loan modifications on behalf of their clients. These negotiations have two major goals; to reduce monthly mortgage payments to a level of affordability for the homeowner and to either stop or avoid foreclosure proceedings. The mission at The Feldman Law Center is to provide the highest level of professional service while delivering the best possible result on each loan modification we negotiate on the behalf of the families we represent.

Having negotiated over 500 attorney driven loan modifications, we realize that each homeowner’s situation is unique and that each modification may require a different approach than the one before it. To that end, we can always call on our 25 years of negotiating, knowledge, and real estate experience to provide the most optimal solutions for each family’s situation. While we are negotiating your loan modification with your lenders our friendly and compassionate team will keep you updated all the way on how the process is advancing.

The people at The Feldman Law Center completely understand the stress of being behind in your monthly payments and the sleepless nights that can be brought on by an impending foreclosure. Rest assured that we will stand with you all the way through the loan modification process and that we are driven to get the best outcome possible for you and your family. If you are struggling with your monthly payments and worried about the threat of foreclosure, we can help. Call The Feldman Law Center today at (949) 544 8224.

What is a loan modification under the new Obama plan? - Feldman Law Center

Under the Homeowner Affordability and Stability Plan the announced by the President on Feb. 18, 2009, the goal of Obama's plan "Make Home’s Affordable" the loan modification plan is meant to reduce the amount struggling homeowners owe on their mortgage to sustainable levels. According to plan details:

· The lender would first be responsible for bringing down interest rates so that the borrowers monthly mortgage payment is no more than 38 percent of his or her income. The magic number baring any additional financial hardships.

· Next, the initiative would match further reductions in interest payments dollar-for-dollar with the lender to bring that ratio down to 31 percent. This is where the plan lends its factors to make things more attractive to the investor’s.

· Lenders will also be able to bring down monthly payments by reducing the principal owed on the mortgage, with Treasury sharing in the costs. The lenders and homeowners both should do well with this if it works.

· Borrowers will be put on a trial modification at the new interest rate and payment for three months. If they make all their payments on time, the modification will be implemented at the new rate and be fixed for five years.

Under Obama's plan, loan modifications will be standardized, with uniform loan modification guidelines used by Fannie and Freddie Mac, and then they will be implemented throughout the entire mortgage industry.
There will still be a need for third party assistance through the process to insure a loan modification approval. Even though the process sounds simple, borrowers must fit strict guidelines for approvals. An attorney that specializes in loan modifications and real estate law is by far the best choice. Borrowers must watch out for loan modification scams and make sure to make fraudulent complaints to the attorney general’s office in their state if they suspect they are targeted. Using an attorney for these matters is the only way to go if you want help.
Stay away from loan modification companies unless you can talk directly to a Lawyer, they are a member of the BBB and maintain an advance fee agreement with the Department of Real Estate.

Who is eligible for a loan modification?

To qualify, you must:

· Have originated your mortgage before Jan. 1, 2009.

· Be an owner-occupant. Non- owner occupied properties may be modified but not under the Obama plan.

· Have an unpaid balance that is equal to or less than $729,750 (for a single-family home).

· Have trouble paying your mortgage due to financial hardship. That could be because you have had an increase in your mortgage payments, or because your income was reduced or you suffered a hardship (like medical problems) that increased your bills, or, you can show that you soon will be unable to make your payments. You will be required to enter an affidavit of financial hardship.

<https://www.efanniemae.com/sf/formsdocs/forms/1023.jsp> It is best to get assistance and proper advice in completing this form.

· Your monthly mortgage payment must also be more than 31% of your gross (pre-tax) monthly income. This is another area where help from an attorney that prepares loan modification request may be necessary.

According to the Department of Treasury
: Anyone with high combined mortgage debt compared to income or who is underwater (i.e., has a combined mortgage balance higher than the current market value of his house) may be eligible for a loan modification. This initiative will also include borrowers who show other indications of being at risk of default. New borrowers will be accepted until Dec. 31, 2012.

Who's not eligible for a loan modification?

Speculators or those who bought homes for investment purposes -- are not eligible. All homes must be owner/occupied. Also, if you cannot afford the home due to job loss or a complete inability to pay, you will not be eligible. Also, mortgages with amounts above the conforming loan limits <https://www.efanniemae.com/sf/refmaterials/loanlimits/index.jsp> would not be eligible. For these reason alone you may need to hire a loan modification attorney to represent you. Lenders guidelines may vary from investor to investor.

How does someone get a loan modification?

First, gather this information:

· Information about the monthly gross (before tax) income of your household, including recent pay stubs if you receive them or documentation of income you receive from other sources.

· Your most recent two years income tax return.

· Information about your assets. This is where one might consider professional advice of what the lender wants to see to qualify.

· Information about any second mortgage on the house.

· Account balances and minimum monthly payments due on all of your credit cards.

· Account balances and monthly payments on all your other debts such as student loans and car loans.

· A letter describing the circumstances that caused your income to be reduced or expenses to be increased (job loss, divorce, illness, etc.).

Second, call your mortgage servicer and ask to be considered for a "Home Affordable Modification." The number is on your monthly mortgage bill or coupon book. Honestly state your situation. They will assess your financial state through phone calls and paperwork to determine whether you qualify for a loan modification. Keep copious, detailed notes on who you speak with and details of the conversations so you have documentation down the road if you are faced with foreclosure.

Third, depending on the direness of your financial difficulties, it’s always good to hire legal counsel. Get a referral from your local state bar association.

Fourth, call a local HUD-Approved Housing Counseling Agency <http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm> for guidance.

Lastly, you can find more loan modification information at http://www.loanmodificatiionhelpcenter.org/

How do loan modifications benefit lenders and borrowers?

A loan modification is usually a win-win situation: the lenders get their money in a reworked fashion and borrowers get a new chance to support their mortgage payments at a reduced cost.

Also, under the Obama plan, there are incentives for both lender and borrower. According to the Treasury:


· Pay for Success Incentives to Servicers: Servicers will receive an up-front fee of $1,000 for each eligible modification meeting guidelines established under this initiative. They will also receive pay for success fees awarded monthly as long as the borrower stays current on the loan of up to $1,000 each year for three years.

· Incentives to Help Borrowers Stay Current: To provide an extra incentive for borrowers to keep paying on time, the initiative will provide a monthly balance reduction payment that goes straight towards reducing the principal balance of the mortgage loan. As long as a borrower stays current on his or her loan, he or she can get up to $1,000 each year for five years.

· Reaching Borrowers Early: To keep lenders focused on reaching borrowers who are trying their best to stay current on their mortgages, an incentive payment of $500 will be paid to servicers, and an incentive payment of $1,500 will be paid to mortgage holders, if they modify at-risk loans before the borrower falls behind.

· Home Price Decline Reserve Payments: To encourage lenders to modify more mortgages and enable more families to keep their homes, the Administration -- together with the FDIC -- has developed an innovative partial guarantee initiative. The insurance fund to be created by the Treasury Department at a size of up to $10 billion will be designed to discourage lenders from opting to foreclose on mortgages that could be viable now out of fear that home prices will fall even further later on. Holders of mortgages modified under the program would be provided with an additional insurance payment on each modified loan, linked to declines in the home price index.

Also, banks would rather have you stay in your home than risk foreclosure since they stand to lose more money through foreclosure.
Think about it: a bank would need to make any repairs to the home, pay real estate agents to list it, and then perhaps list it at a discounted price. And, if the real estate market is slow, the price could be further reduced. There originally were only a few law offices providing loan modifications in the entire country up until lately. The Feldman Law Center in California has had great results for well over a year now with loan modifications. Mr. Steven C. Feldman was one of the original loan modification attorneys and has practiced law for over 30 years. A nationally recognized attorney, Feldman has helped thousands of home owners avoid foreclosure. For more information about Loan Modification please call us at (800) 588-0425 or visit http://www.feldmanlawcenter.com/