She Lost Her Home, and Now The Collectors are After Her

Q:

Question: I had a 80/20 loan combo with the same company; the 80 loan went into default and the house was auctioned off. The 80 loan was originally 64,000 and the 20 loan was 22,000. With the high interest rate we were not paying much on principal so when the house was auctioned off it was sold for $86,000 (the original price when we bought it). But with all the fees and court costs the 20% loan was not paid by the proceeds of the auction and so now we are being harassed by a collection company to pay this loan. My question is, do we have to pay this loan back? I don’t understand why, because what would we be paying for? Please help, we are so confused. Thanks

A:

The laws differ from one state to the next. In many states you’d find yourself responsible for any losses suffered by the holder of the 2nd mortgage, and this could very well be the case in your state. You may want to consult a real estate attorney in your area (many offer free consultations).

California State Bar Shields Disgraced Judges

The California Commission on Judicial Performance describes its mandate thusly:
“The Commission on Judicial Performance, established in 1960, is the independent state agency responsible for investigating complaints of judicial misconduct and judicial incapacity and for disciplining judges, pursuant to article VI, section 18 of the California Constitution.

The Commission’s mandate is to protect the public, enforce rigorous standards of judicial conduct and maintain public confidence in the integrity and independence of the judicial system. While the majority of California’s judges are committed to maintaining the high standards expected of the judiciary, an effective method of disciplining judges who engage in misconduct is essential to the functioning of our judicial system. Commission proceedings provide a fair and appropriate mechanism to preserve the integrity of the judicial process.”

To that end, the CJP’s website lists – alphabetically – all disgraced judges admonished, censured or removed in the past 20 years.

However, the California State Bar (www.calbar.org) is blissfully unaware of that list. Even though the attorney records on its site are supposed to disclose all administrative and public actions taken against the licensees, I have cross-referenced the CJP list with the California Bar records, and – surprise! – no adverse actions are shown on any of their records. Moral lapse on the part of the ethics-enforcers?

Bank is Trying to Intimidate Buyer

Q:

I am buying a bank owned foreclosed home in Michigan. The asking price was $$40,000, but wee finally agreed on $37,500 with concessions of $2,500. Closing is to take place no later than the end of this month. Two weeks ago, I was faxed an addendum that states the sellers concessions will be 2,250, and not $2,500, and that if I don’t sign the addendum, the contract is void. I have already given the bank a deposit of $1,000. My Good Faith Estimate states that I will need to bring approximately $3,500 with me to the closing. I have already paid the Mortgage Appraisers $400, and I have already signed the addendum that states I will not get a “warranty deed” but instead I will receive a “quit claim” deed. In addition to the money needed at closing, I also have to pay my real estate agent a fee of $195 and a “reo compliance fee of $395.

Does this all sound right? thank you for any help you can offer.

A:

You have raised a number of different issues, which I will try to address:

1. A quit claim deed is not as good as a warranty deed and it does not give you a perfect title to the property; however, most deeds given in foreclosure sales provide a less than perfect title, as this is the nature of the beast. Having said that, it seems to me that since you are not buying the property in a foreclosure sale but directly from the bank, you should insist on getting a warranty deed.

2. Only a review of your contract can determine whether the seller can change the concession from $2,500 to $2,250. Normally, I would not get too uptight over a minor change of $250, but the question remains: does the contract allow the seller to change the seller’s concessions?

3. The closing fees could have been negotiated by you when you first made the offer to purchase. As they stand now, they are certainly not out of line.

Since the purchase of a bank-owned property introduces some elements of risk to the transaction, it would make sense to spend a couple of hundred dollars and have an attorney review the documents.

Mortgage Scamster Sentenced in New York

 LEV L. DASSIN, the Acting United States Attorney for the Southern District of New York, announced that DOMINICK DEVITO was sentenced to 51 months in prison on May 19, 2009, by United States District Judge BARBARA S. JONES in Manhattan federal court for mortgage fraud, insurance fraud and obstruction of justice.

According to Counts One, Thirteen and Fourteen of the Indictment, the charges to which DEVITO pleaded guilty; other documents filed in the case; and statements made during the guilty plea and sentencing proceedings: From January 2002 through November 2004, DEVITO was the leader of a fraudulent real estate investment scheme that purchased multimillion-dollar residential properties in various communities in Westchester County — including Purchase, New York — with loans obtained through the submission of false and misleading information to banks and other lenders. DEVITO identified properties for sale, orchestrated the purchase of the properties, and performed construction work at the properties.

In addition, from January 2003 through February 2005, DEVITO engaged in a scheme to defraud insurance companies by submitting false and misleading insurance claims and supporting documents for water damage caused by broken pipes at several of the homes he and his co-conspirators had purchased as part of the mortgage fraud scheme. DEVITO obstructed justice in connection with his sentencing in 2003 in Manhattan federal court for racketeering and mortgage fraud in an earlier case. Specifically, DEVITO submitted false and misleading information regarding the value of his assets and his personal net worth following his sale of a property located in Purchase, New York.

DEVITO, 45, pleaded guilty before Judge JONES on July 22, 2008. In addition to his 51-month prison term, Judge JONES ordered a supervised release of 3 years and ordered DEVITO to forfeit a total of $1.4 million.

He is Upside-Down and Saddled With an Option Arm

Q:

Like many of our neighbors in Las Vegas we refinanced our home mortgage 3 years ago and paid off credit cards.  We accepted a less than interest only payment plan where the balance of our loan increased each month and now the total is well above the estimated value of the home. As the reset date approaches we have attempted to refinance into a fixed rate, we can afford a higher payment, just not the higher rate current mortgage.  We would have to come up with about 35,000 as the appraisal is 250,000. Our credit is very good, all are bills are current, and we own our cars.  Do you have any advice?  I don’t feel we were deceived; just victims of circumstances.  Any help would be greatly appreciated,

A:

Although negative-amortization loans have received a bad rap in the aftermath of the mortgage meltdown, in reality they are an excellent cash management tool in the hands of a borrower who understands how the loan works.

I assume that your monthly payment statement gives you 3 payment options:

1. A minimum payment (e.g. 1.0%)

2. Interest-only payment

3. A fully-amortized payment.

Option 3 is based on the full interest rate, and in any month that you choose that option, your mortgage balance will be reduced. Now, if you were successful in refinancing your loan, I doubt that your new interest rate or payments would be that much different than what option 3 is already giving you.

Unless your lender is willing to allow a loan modification, your best bet might be to stay with the current mortgage.

A Top Talk Show Host “Saw the Meltdown Coming”

Bill Handel, a talk show host  on KFI-AM in Los Angeles, has the most listened-to  morning show in the US. He is irreverent, very knowledgeable on a myriad of subjects, refuses  to toe the politically-correct line and is generally very funny. The format of his show will remind you of the Don Imus or the Howard Stern shows – banter with members of the “morning crew”, and jokes that usually don’t pass the threshold of good taste. Lately, he has told his audience on a few occasions that he’d been among the first to decry adjustable rate loans and that he predicted years ago the oncoming mortgage meltdown.

It would be nice if that were really the case.  If he could show that he – Bill Handel – is not just a funny guy but is also a financial sage, it would certainly add some gravitas to the show’s image and to himself. Unfortunately, it is not true. There is a reason why the members of his crew are eerily silent whenever he makes that claim.

One of the casualties of the mortgage meltdown has been HMS Capital, a mortgage company based in Westlake Village, California, and previously a large advertiser on the Bill Handel Show. In 2004, 2005 and 2006, when conscientious mortgage companies were steering their customers toward fixed rate mortgages, Bill Handel was telling his listeners to apply for an Option ARM loan with his sponsor, HMS Capital. “This is an amazing loan”, he would say in his commercials, “I even sent my mother to HMS Capital to refinance her mortgage with them.”  How many of his listeners have lost their homes when those interest rates re-set is an open question, and we hope that Handel’s mother still has her home (lately, Handel was using the same sales pitch to promote the fixed rate loans of his current sponsor, again mentioning his mother in the commercial). Be it as it may,  no one can blame Handel for the misfortunes of listeners who use his advertisers.

Certainly not a financial sage, Bill Handel was pushing toxic loans on his show until the inevitable meltdown. Handel’s position as the No. 1 talk show host in the US is secure, which is why he should not try to embellish his CV with curious claims of financial sagacity.

Lender Tricked Her Into PMI

Question:

I have been tricked into refinancing to a new loan that has PMI.  My loan prior to refinancing did not carry a PMI but I had two loans, a first loan w/ 80% and the second loan w/ 20%.  I decided to refinance to combine two loans into one. My mortgage broker told me that I was paying PITI.

None of the closing documents from the lender indicate or disclosed any PMI.  THey used the word ‘Escrow’  instead of PMI.  A month later I got a bill for my insurance and taxes. I called the mortgage broker and she told me that she was going to check and the letter did not make sense. She never contacted me. Her assistant called back and told me that it is not Escrow, rather it’s PMI.

I already lost the ability to compare loans but I also lost the 3 day period where I could have canceled the loan if I had known that it will carry a PMI.  My loan interest rate is fixed and I recently receive a letter from the lender that my monthly payment is going up. When I called, even the customer service agent was confused and she thought I have an escrow account. I had explain to her everything. Then she took the time to review all my documents to find out the reason for the increase in monthly payment. After reviewing, she told me that I have a negative PMI account. That some type of money should have been collected upon closing to go the the PMI account and it was never collected.  With that, I have a negative balance and they need to adjust the amount of PMI that I would have to pay monthly.

This explanation even reinforced to me that there was an intent or malicious act to hide the truth about the PMI on my account, both on my mortgage broker and at the same time the representative from the lender who should have reviewed the documents before closing. What are my options?  This unscrupulous practice should not be tolerated in any way, shape or form.

Answer:

Even though the 3-day rescission period has expired, you can still rescind the loan if:

1. You did not refinance with the same lender who held the previous loans.

2. There was a Truth-in-Lending violation in the disclosures you received from the lender, such as non-disclosure of PMI.

3. The property is owner-occupied.

Most real estate attorneys will offer a free consultation to review your situation. If it turns out that your loan can be rescinded, you will receive back from the lender all interest you’ve paid to this point, as well as the loan fees you paid to obtain the loan; however, you will have to go through another refinance to replace the current lender with a new one.

$20 Billion for Wall Street Bonuses

President Obama is not the only one who is upset over the huge bonuses the Wall Street honchos voted for themselves; with the exception of the beneficiaries, the American public seems to be furious, and rightly so. After all, these are the people who have single-handedly brought the American economy to its knees.

A guest on one of the cable channels suggested that Obama give the Street people a deadline to return their bonuses to their employers. Those who do not, he proposed, should be federalized, drafted and sent immediately to do combat duty in Iraq and Afghanistan.  On second thought, this is not a bad idea at all.

New Services Added

Loan Modification

Unlike the rosy picture painted by many of the loan modification companies, the professionals know that the process is slow and difficult. To get the desired results, the loan modification attorney needs ammunition he can use in negotiating with the lender, and our forensic loan audits proide that ammunition.

We look for the obvious: RESPA and Truth-in-Lending violations.  We reverse-engineer the client’s loan on our software and compare our certified printouts with the lender’s disclosures. The substantive violations, when found, provide the ammunition the attorney uses in negotiating a loan modification and/or monetary settlement with the client’s lender.

Foreclosures

The forensic loan audit may be used in stopping residential foreclosures. Homeowners whose loans are currently in default are advised to call us for a consultation regarding such audit.

What We Need From You

A copy of the homeowner’s loan file (if need be, he/she may ask the lender for a copy of the file).

Cost of Audit

There is a flat fee of $500.00 for the forensic loan audit, which may be paid by credit card. To pay by credit card, click here.

Turnaround Time

We guarantee a turnaround time of 48 hours or less.

Levi Johnston’s Mother Arrested On Six Felony Drug Counts

I tell you, that Sarah Palin’s the gift that keeps on giving…