More Help from Fannie

Fannie Mae this week told all of its servicing institutions that in cases where a delinquent borrower is unemployed and working with his/her state's Hardest Hit Fund programs, the servicer MUST not either refer the property for foreclosure or hold a foreclosure sale for at least 45 days. The period commences when the servicer is formally notified of the homeowner's participation in the program. According to DS News, the 19 states participating in this program are Alabama, Arizona, California, Florida, Georgia, Illinois, Indiana, Kentucky, Michigan, Mississippi, Nevada, New Jersey, North Carolina, Ohio, Oregon, Rhode Island, South Carolina, Tennessee, and Washington, DC. For details, call Fannie Mae or log on to its site: www.fanniemae.com . Good luck.

Banks MUST Keep A Promise!

In what would seem obvious to most people, A California appellate court announced this past Thursday that if a bank makes you a promise not to foreclose without first making a legitimate attempt to do a loan modification, it has to keep that promise. Duhh! Well, it wasn't obvious to US Bank, who broke exactly that type of promise and took a woman's home from her by foreclosure. Seems the lady had taken out an adjustable 30 year mortgage mortgage on her LA home in 2006. After a couple of years, she couldn't afford the monthly payments required by the loan. US Bank did what any bank in these circumstances would do--they filed an NOD and started the foreclosure process rolling. The lady upped the ante by filing for bankruptcy, hoping that by doing a Chapter 13, she'd keep the house and be allowed to repay the bank over a longer period. According to her, the bank then offered her a deal she couldn't refuse. If she dropped the bankruptcy action, they'd sit down with her and put together a loan mod that would allow her to keep her home while making payments she could afford. Sounds pretty reasonable, don't you think?
What happened next, you ask. She unfortunately took the bank at its word, dropped the BK filing and five days later to show their gratitude, the bank scheduled a foreclosure auction for a month later without telling her. The day before the auction, she says the bank did call her and offer to let her stay if she agreed to a new loan at higher payments. What a deal!! The foreclosure took place and the bank got the house, after which it evicted the woman.
Did she take this lying down? Would you? She called lawyer and sued the bank. Round 1: bank wins at trial and her suit gets thrown out. But as with any fight, barring a KO, there are more rounds to follow. She appealed and, as noted above, she won on appeal, a unanimous 3-0 decision by the appellate court. The court said US Bank had acted in bad faith by its actions, and, while not giving the lady her home back, reinstated her suit against the bank for damages. Stay tuned for the final decision on how much she receives in the actual suit.
A word of advice on this if you are in a similar situation: this is a California court decision and is not necessarily binding on other states' courts, but a promise is (or at least should be) a promise. Check with your own counsel (if you can't afford a lawyer, call Legal Aid) for its possible applicability to your own situation--and good luck.

Good News : HAFA Mods & Fannie Video

In the last few days two very exciting items have been made available to homeowners at risk of foreclosure: one from the Treasury dealing with HAFA (Home Affordable mod program); and one from Fannie Mae in the form of an interactive video format.

The first, modifies HAFA's rules for getting a loan modification. There are four primary changes to the rules governing the program:
1.) Loan mod applicants must receive a decision within 30 days from the lender holding the mortgage;
2.) Loan servicing firms no longer have to verify financial info provided by the borrower/homeowner;
3.) Loan servicers also do not have to verify any longer if the borrowers debt to income ratio exceeds 31%;
and 4.) Lenders holding second or other subordinate liens will no longer be required to accept an amount equal to 6% of the existing unpaid balance of the loan.
All of these changes, while by no means guaranteeing a mod will be approved, will at least go a long way to insuring prompt response from the lender/lienholder so that the borrower can know what their prospects are and make any necessary arrangements related to their own situations.

The second item, from Fannie Mae to you, involves the use of interactive videos to attempt to help threatened homeowners learn how to avoid foreclosure. Called WaysHome, it is now viewable on the Fannie Mae website www.knowyouroptions.com .The site has actors playing the parts of distressed homeowners and allows the real homeowner using the site to participate in the fictional homeowner depicted's decision to achieve a remedy to the particular situation depicted. By having the visitors to the site taking the part of the people depicted on the site, it helps them learn different options, allows them to make decisions for each option, and learn what results may be expected in a given situation. Details can be obtained at the web site, or by contacting Fannie Mae.

Good luck in using either or both of these tools.

A Plus From the Bay State

Although the ruling was by the Massachusetts Supreme Court, it may have far wider implications. The court reversed two foreclosures that had been completed, saying that the banks involved didn't prove they held the proof of the debts--the mortgage notes--when they foreclosed. Stay tuned!