Black and Buono Blog

...by Anthony Buono

In March 2009, the Obama administration launched the Home Affordable Modification Program (HAMP) which promised to keep 3-4 million struggling families in their home.  To date, the HAMP program actually helped about half a million.  Treasury Secretary Timothy Geithner has acquiesced the program will not meet the numbers promised.

On March 16, 2011, the Congressional Oversight Panel (COP) released its final report.

Within the report released December 14, 2010, the COP reported, “In April 2010, in its most recent report on Treasury’s foreclosure prevention programs, the Panel raised serious concerns about the timeliness, accountability, and sustainability of Treasury’s efforts. The Panel also noted “It now seems clear that Treasury’s programs, even when they are fully operational, will not reach the overwhelming majority of homeowners in trouble…. Treasury is still struggling to get its foreclosure programs off the ground as the crisis continues unabated.”

The report’s conclusion of the success of the HAMP was brutal yet honest.  “The Panel now estimates that HAMP will prevent only 700,000 to 800,000 foreclosures – far fewer than the 3 to 4 million foreclosures initially promised, and vastly fewer than the 8 to 13 million foreclosures expected by 2012.”

 “In particular, banks typically hire loan servicers to handle the day-to-day management of a mortgage loan, and the servicer’s interests may at times sharply conflict with those of lenders and borrowers.”

“For example, although lenders suffer significant losses in foreclosures, the loaning institution can turn a substantial profit from foreclosure-related fees. As such, it may be in the bank’s interest to move a delinquent loan to foreclosure as soon as possible.”

“Another major obstacle is that many borrowers have second mortgages from lenders who could profit by blocking the modification of a first mortgage. Therefore, HAMP’s straightforward plan to encourage modifications has proven ineffective in practice.”

The report provides an answer to why most HAMP applicants have had the same paperwork requested several times by the same lender during their loan modification approval process without reasonable explanation.

The COP report concludes that the real problem with the HAMP approval process may have been that “Treasury has also failed to hold lending banks accountable when they have repeatedly lost borrower paperwork or when they have refused to perform loan modifications.”

The Panel communicated had several more concerns and made suggestions to the Treasury for improvements.  This feedback was ignored.  COP concluded, “many billions of dollars set aside for foreclosure mitigation may be left unused. As a result, an untold number of borrowers may go without help – all because Treasury failed to acknowledge HAMP’s shortcomings in time.”

The COP offers now that at least there should be learning from mistakes in developing any further programs.  “Future policymakers should be mindful that the incentives of mortgage lenders are different from those of the government, and design any foreclosure mitigation program with that reality in mind.”

Truer words could not have been spoken by the COP.  Those that work in housing related industries do understand the problem from the perspective of real world everyday business workings unlike those who are making policy in Washington D.C.

The fact is that the federal government penalizes anylender that actually agrees to reduce a borrower’s principal amount or even lower their interest rate. In the past, when a financial institution purchased a mortgage on the secondary market and modified the loan, the homeowner was taxed on the debt that was forgiven, and the financial institution was taxed on the difference between the purchase price of the loan and the new modified face amount.  Because of this, mortgages were rarely, if ever, modified.

Because of the housing crisis, the tax on homeowners was eliminated, but the tax on the lender was left untouched.  This has become a very real deterrent to modification, and almost half of all mortgages modified since 2005 have re-defaulted within a year of modification.

It only stands to reason that if this tax is eliminated, the number of modifications will increase, and the number of foreclosures will decrease.
 
In reality, those institutions providing loans really don’t want to take over the titles homes.  They would much prefer to figure out a way to keep people in their homes and get the loan performing again.  This takes a lot of time and personal attention however, which larger loan institutions simply cannot handle.  Large banks and lenders do not have the resources to meet with each homeowner and evaluate their ability to pay.  People in trouble need to work with individuals who specialize in this process. There is a difference  between homeowners that can actually afford to stay in their homes and those that cannot.
 
Original article written By Brenda Krueger Huffman-and can be read at AXcess News

By Anthony Buono

Many people come to me when, financially, it is already too late. They have been receiving the notice of foreclosure letters for 120 days, and all of a sudden they need to be out of their house tomorrow and they want us to help them. Understand, we would love to help, but we needed to begin our dialogue several months or at least several weeks ago. If you have over $15k in Credit card debt and you make less than $100k a year, you need to talk to someone. You are already in financial trouble. If you are paying the minimums on your credit card, at this rate it will take you 22 years to pay off your credit card debt.

Does that sound familiar? If you are living week to week, then your financial situation is not stable. You should talk to a professional credit or bankruptcy attorney. There are warning signs of financial troubles, but unfortunately, human nature is to stick our head in the sand.

This is not the answer to consolidating your debt, avoiding bankruptcy, or staying out of bad financial straits. Plan ahead if you are having financial troubles. How do you know you are having financial trouble? With a little introspection, you will realize that you already know if you are. However, here are some questions you should ask yourself: Are you paying for essentials with a credit card? Are you paying only the minimums on your credit cards? Do you owe more than 15k in credit card debt and making less than $100k per year? Have you skipped a mortgage payment? Or two? Are you living week to week? Have you already received a notice of foreclosure on your home? If any of these questions ring true, please call us at 877-619-5089 while there is time for us to help you. If all of these ring true, please call us today. And, while it is human nature to choose to ignore these problems, think of how much better you will sleep at night once you start getting answers to your questions, start putting together a solution, and start understanding the process. Call us at 877-619-5089 for yourself and for your family.

By Anthony Buono

In Massachusetts, so many residents are looking for a way to consolidate bills, lower their monthly payments and regain control of their finances. And it is not just the unemployed who are struggling; even those who are gainfully employed are having difficulty trying to make ends meet.

A mountain of debt is stressful and can lead you to make even more financially bad decisions. Calling or clicking on radio and internet ads promising you government debt consolidation relief is one of those bad decisions. Here is the situation: The government is not in the business of originating debt consolidation loans. Private companies are, and in exchange, they charge high fees and interest rates. When you hear a radio ad or see a banner ad extolling the virtues of the next government debt relief program, understand that the ad is being run by a for-profit private company and is using false advertising to trick stressed out consumers into thinking a government agency will be helping them instead of a for-profit business.

You can consolidate your debt by working with a debt consolidation company but you need to avoid the dishonest companies. Those companies that promise government loans or Obama debt relief are misleading consumers through advertising. Debt consolidation is a legitimate way to gain control over your credit card debt and there are companies that will consolidate all of your monthly debt into a single loan. However, having a lawyer who is experienced in debt consolidation and bankruptcy law can help you steer clear of these types of companies that are dishonest, or charge too high fees. A lawyer can negotiate with the issuers of your credit cards to eliminate a portion of your debt. At Black and Buono, we do not have interest rates and fluctuating fees to do this for you like the debt consolidation companies do. And we will get answers to important questions such as what financial penalties are levied against those who pay back their loans late. We will also have for you a written scheduled that shows exactly when your debt consolidation loan will be paid off when you make your payments on time every month.

When you are stressed and facing desperate times, bad decisions are made. With high unemployment, house values dropping and bankruptcy and foreclosure filings rising, more and more consumers are bound to click or call these companies making false claims. Know your options, and make good decisions. Get help with your credit card debt the right way. Good financial decision making and common sense starts with a phone call to Black and Buono at 877-619-5089.