Nationwide Judges are receiving complaints against banks and mortgage providers for dragging their feet and not providing the customer service that is to be reasonably expected. Especially since the government is paying for mortgage providers to deal with loan modifications as fast as possible.

Unfortunately Banks and service providers are not carrying out loan modifications as fast as was expected by the government or hoped by homeowners. I find this hardly surprising. If I had a business and was asked to spend money to reduce the monthly income I receive from a debtor I would make sure I was suitably compensated. The fact is that in some cases banks end up worse off when they modify a loan.

What is not so easy to empathize with is when banks systematically stall procedures, lose paperwork and change their requirements systematically. This has been the story that has been told nationwide and some judges are starting to tire of it all.

One case that has hit the news is that of Bobbi Giguere, initially published on the New York Times. Mrs Giguere submitted her paperwork three times to no avail. Last Thursday an interesting turn of events occurred at Judge Randolph J. Haines courtroom. Judge Haines instructed Mrs Giguere to question a Wells Fargo high ranking executive on the bank’s lack of response towards her loan modification.

Judge Haines explained the irregular procedure as a response to the growing concerns about Wells Fargo’s mortgage modifications practice.
The problem is that this is not an isolated case. Consumers nationwide are complaining (that is certainly not new) about the difficulty of getting a response from their mortgage servicers. This is threatening the success of the Obama Administration’s loan modification plan. While banks and mortgage servicers stall their response many homeowners foreclose on their mortgages and lose their homes which in many cases is good news, or the least of two evils for banks and loan providers.

The questioning of Mr. Ohayon the Wells Fargo executive was carried dramatic enough to be part of any lawyer movie. Mr Ohayon initially stated that Mrs. Giguere had repeatedly failed to provide a financial worksheet, a critical document for the loan modification to be processed.

Then came the fun part, what courtroom dramas are all about. Under cross examination Mrs. Giguere produced the letters Wells Fargo sent requesting the paperwork required for the loan modification. She asked Mr. Ohayon to read the letter and he was forced to concede that the letter did not ask for a financial worksheet.

This irregular procedure in which a Judge requires a large bank corporation like Wells Fargo to place an executive on the witness bench shows the federal frustration on the way loan modifications are being carried out throughout the United States.

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Related posts:

1. Loan Modifications: What to Do When Banks Don’t Play Fair
2. Loan Modifications, 3 Nightmare Stories You Don’t Want To Copy
3. Loan Modification: Wells and Fargo VP Vows To Improve Bad Service

Related posts:

1. Loan Modifications: What to Do When Banks Don’t Play Fair
2. Loan Modifications, 3 Nightmare Stories You Don’t Want To Copy
3. Loan Modification: Wells and Fargo VP Vows To Improve Bad Service

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Filed under: Law, Citigroup Inc. (C), Morgan Stanley (MS)

On Friday, Citigroup Inc. (NYSE: C) filed suit in U.S. District Court in Manhattan against rival Morgan Stanley (NYSE: MS) for allegedly breaching a credit-default swap agreement. The suit seeks unspecified damages.

The complaint alleges that Morgan Stanley, which recently announced that its CEO will step down, failed to live up to its obligations regarding the 2006 agreement. Citigroup’s Citibank unit says it entered into CDS with Morgan Stanley to protect the bank against losses from a revolving credit line that it entered into with a collateralized debt obligation known as Capmark VI. The CDO was scheduled to mature in 2038, but its performance declined substantially after July 2006 as a result of the global financial crisis.

Continue reading Citigroup sues Morgan Stanley over credit-default swap agreement

Citigroup sues Morgan Stanley over credit-default swap agreement originally appeared on BloggingStocks on Sat, 26 Sep 2009 17:40:00 EST. Please see our terms for use of feeds.

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Filed under: Stocks to Buy

“If you focus on stocks that pay you to own them — you’ll get your cut over and over and over again as you really won’t have to worry or care what happens to the general market; and that will be true today, tomorrow, next month and next year,” says Neil George.

In his income-focused Stocks that Pay You, he says, “I have found seven picks that will pay you 7% or more to own them and are perfect for retirement income as well as just building up your portfolio’s value.

“The seven fall into three categories: funds, minibonds and preferreds. But what makes them all fit together is that they have proven themselves to keep paying regardless of what the economy or the markets might throw at them — even the fiascoes of the past several months.

Continue reading Seven over 7: Seven picks paying 7+ percent

Seven over 7: Seven picks paying 7+ percent originally appeared on BloggingStocks on Fri, 25 Sep 2009 11:10:00 EST. Please see our terms for use of feeds.

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Filed under: KB HOME (KBH), Housing, Recession

The housing market got two pieces of bad news Friday. The first being weaker-than-expected earnings for KB Home (NYSE: KBH) and the second being a less-than-expected rise in new home sales last month.

First, the good news. New home sales did rise last month. In the current economic environment, that by itself is good news. Unfortunately the rise was less than analysts had been expecting to see.

Continue reading New home sales rose less than expected last month

New home sales rose less than expected last month originally appeared on BloggingStocks on Fri, 25 Sep 2009 13:30:00 EST. Please see our terms for use of feeds.

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Filed under: Analyst reports, Analyst upgrades and downgrades, American Express (AXP), Research in Motion (RIMM), Procter and Gamble (PG), Analyst initiations

Analyst upgrades:

• FBR Capital upgraded McAfee (NYSE: MFE) to Outperform from Market Perform after channel checks indicated the company’s September quarter deal flow has been stronger than expected. FBR raised its target on shares to $50 from $41.
• Thomas Weisel upgraded Adtran (NASDAQ: ADTN) to Overweight from Market Weight, citing increased wireless backhaul capex spending by Tier-1 carriers. The firm raised its target to $32 from $21.
• RBC Capital upgraded Brunswick (NYSE: BC) to Outperform from Sector Perform as the firm thinks the company no longer has liquidity risk and can generate significant profits by 2012. The firm set a $17 target on the stock.
• Bronco Drilling (NASDAQ: BRNC) was upgraded to Hold from Underperform at Jefferies.
• LSI Corp. (NYSE: LSI) was upgraded to Buy from Hold at Deutsche Bank.
• UBS upgraded U.S. Airways (NYSE: LCC) and UAL Corp. (NASDAQ: UAUA) to Buy from Neutral.

Continue reading Analyst upgrades, downgrades and initiations: AXP, CL, DLTR, PG, RIMM, UAUA …

Analyst upgrades, downgrades and initiations: AXP, CL, DLTR, PG, RIMM, UAUA … originally appeared on BloggingStocks on Fri, 25 Sep 2009 11:50:00 EST. Please see our terms for use of feeds.

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If you thought flipping homes was over, think again.  If you thought HGTV inspired granite countertops were a thing of dreams, it is time to open your eyes once again.  The California housing bubble mentality is back and it is bringing back the gold rush housing mentality.  It is tunnel focused and it fails to […]

If you thought flipping homes was over, think again.  If you thought HGTV inspired granite countertops were a thing of dreams, it is time to open your eyes once again.  The California housing bubble mentality is back and it is bringing back the gold rush housing mentality.  It is tunnel focused and it fails to see the Alt-A and option ARM tsunami knocking on the door waiting to crest in 2010.  The shadow inventory is so lucrative, that you have ex-Wells Fargo senior executives throwing parties in homes instead of showing the home to potential clients.  But today, we have a fantastic blast from the past.

A reader sent in a home that I covered in Pasadena back in November of 2008.  Covering over 120+ Real Homes of Genius in Southern California, I had to put my thinking cap on.  Once I clicked on the link I immediately remembered, “bring your own bulldozer.”

Some real estate ads are crafted with the words of an elementary school poem.  This home when it was listed the first time had some crafty wording that left many of us speechless.  I saved some of the wording from the original ad:

“Bank approved sale pueblo with potential and amazing short sale / foreclosure opportunity to craft your own southwest environment in development hot north /west pasadena one of two side by side properties now available.”

Yes, you would think that a home in “Southwest” Pasadena would be like a home in the blazing Arizona desert.  But the ad gets more brazen:

“Both have been lovingly and completely gutted and now stand as good-to-go exterior shells ready for your creative touch, or byob (bring your own bulldozer) large lot, school in close proximity spectacular mountain views.”

Here are the original images of how real estate professionals “lovingly” gut a home:

Now for a Real Home of Genius this had it all.  An ad full of hyperbole, a massive previous mortgage, and an aspiring flip.  This home did not sell quickly:

Price Reduced: 04/09/08 — $479,000 to $450,000
Price Reduced: 04/26/08 — $450,000 to $375,000
Price Reduced: 05/01/08 — $375,000 to $360,000
Price Reduced: 05/24/08 — $360,000 to $279,000
Price Reduced: 06/22/08 — $279,000 to $249,000
Price Reduced: 07/17/08 — $249,000 to $239,000
Price Reduced: 10/24/08 — $239,000 to $219,000
Price Increased: 11/03/08 — $219,000 to $230,000

It looks like the home eventually sold for $164,000 in July of this year.  The home sold at the peak for:

08/23/2006: $522,000

So you might think that would be the end of the story.  Well this home now has a Southwest feel:

Excellent work.  What is your estimate of how much money went into this rehab?  I can just imagine the Flip This House graphic running across the screen.  The home has been listed for 5 days on the MLS.  Here is the new ad:

“Charming Spanish Bungalow, 3 /BR 2/ Bath, completely updated, New central AC, electrical, plumbing, cabinetry, designer quality. Open floorplan, light & bright, El Fresco deck, large satillo tiled patio. Stainless steel appliances, tumbled limestone, granite, Minutes to The Rose Bowl and Brookside Country Club, views of Mount Wilson & San Gabriel Mountains, large yard.”

Someone clearly brought their own bulldozer.  What is the current list price?  $389,000.  There is one tiny impediment.  The similar home next door is a foreclosure:

Whoops!  Looks like someone needs to bring another bulldozer.

Now imagine buying the remodeled home and having to live next to construction.  Plus, what do you think is going to happen to your comp price when the home sells for $139,000?  Will it sell for that price?  Probably.  To who?  Another aspiring flipper.  But will the numbers break even.  This home sold at the peak for:

Sold 06/16/2006:   $460,000

The only problem, homes are selling on this street but for lower prices.  Let us take a look at some next door neighbors:

The remodeled home is listed at $389,000 with 3 bedrooms and 2 baths with 1,340 square feet.  The other two comps right next door have this data:

If we use the first home, we arrive at a square foot price of $282.  The current home is being sold for $290 per square foot.  Not so bad right?  Well the home that recently sold for $250,000 is 3 bedrooms and 2 baths and is on 1,283 square feet.  The question is, what is the condition of the place?  This area of Pasadena has one of the lowest median prices at $419,000.  This region is a prime candidate for Alt-A and option ARM problems.  It doesn’t fall in the elite part of Pasadena and it isn’t cheap enough like the Inland Empire to make sense for a cash flow investor.  You would lose money each month.

So whoever buys this place, needs to gear up for construction on the neighbor’s home or worse, it sitting empty.  Also, expect a hit on the comp simply because of the foreclosure resale.  Simply looking at the square foot of recent comps is nonsense.  Just because prices have fallen by a lot doesn’t mean that homes are now cheap.  You have to take everything on a case by case basis.  How are incomes in this area?  Is this a good area?  The name of a city is not enough.  Think of Palo Alto and East Palo Alto.  And when you think of Pasadena just say, “I need more bulldozer.”

Today we salute you Pasadena with our Real Homes of Genius Award.

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Real Homes of Genius: Pasadena Home and Bring Your Own Bulldozer. Flipping Homes in the Worst Housing Market in a Century. Granite Countertop Redux.

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Desperation is not the best state of mind to make good financial decisions. Loan Modifications are no exception. The situation of many homeowners is becoming so desperate many will jump on to pretty much any scheme they feel has a chance of saving their home whatever the consequences.

This of course is perfect breeding ground for the scum of finance, con artists that prey on desperate homeowners to dupe them from their hard earned cash and only worsen their sad situation.

Mimic and camouflage
One of the methods these companies use is to mimic the advertising and appearance of government schemes that are designed to help homeowners. For instance loan modification companies will include the word “HOPE” in order to mimic the name of the Obama Administration’s mortgage aid program.

These organizations will also advertize themselves as licensed public service offices. This way they camouflage themselves as nonprofit organizations when they are not. In order to do this they will open their radio and tv adverts with claims of being a public service. This form of camouflage is very effective. Often when loan modification companies cold call private homes the homeowners think they are speaking with a federal institution or a nonprofit organization and speak to them as such. This creates conflicts of interest where the loan modification companies without scruples can take advantage of.

Promises, promises
Another technique of loan modification scams is to promise the moon and deliver nothing. Consumers are promised incredible loan terms that end being just that, incredible. Of course before the outrageous claims of low mortgage interest rates and reduced monthly payments are seen for what they are homeowners often pay high fees for which they get little if anything in return. Sadly they often lose their homes.

The number of loan modification scams is surprising.Since February the FTC has filed 19 cases of mortgage and loan modification scams. The specific scams change from claim to claim but the basics are the same. Outrageous claims of loan modification success rate, sometimes of 95% and more.
These companies will exact their fees from monthly installments from the homeowners or as an upfront payment equal the mortgage payments of one month. In many States, like Maryland, this is actually illegal.

Loan modification schemes adapt to the times and the news. Whatever is new and exciting in the loan modification industry is good bait for the next scam. For instance the new federal Home Affordable Modification Program has had plenty of airtime, loan modification companies will use words and expressions that attach them to these programs and that way some of the interest and trust generated by the government is transferred to the loan modification company.

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1. Loan Modification Scams: Oregon AG Comes To The Rescue
2. Loan Modification Mogul Sued For Duping Desperate Homeowners
3. Loan Modification Consultants sued for scamming desperate home owners.

Related posts:

1. Loan Modification Scams: Oregon AG Comes To The Rescue
2. Loan Modification Mogul Sued For Duping Desperate Homeowners
3. Loan Modification Consultants sued for scamming desperate home owners.

Source [blownmortgage]

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