The pitfalls for trusting your bank one more time; Beware The Foreclosure Sharks

FinanceMortgage & Debt

  • Author Dan Havey
  • Published March 12, 2010
  • Word count 880

Part 4 (Excerpt)

The pitfalls for trusting your bank one more time; Beware The Foreclosure Sharks

This whole loan modification thing reminds me a lot of the old Peanuts comics where every fall Lucy would get out with the football and she would set it down on the ground, and she would coerce Charlie Brown into coming along and kicking the football. Well of course as we all know Charlie never got to kick the ball, Lucy always pulled it out from underneath him and I kind of look at the mortgage industry, the servicing end of it in particular that way.

You have to think about it, in many cases the loan that you were put into was not a good loan in the first place. The person who gave you that loan knew it was not a good loan, the Wall Street banks that came up with these crazy ideas should have known better. Now admittedly they didnt otherwise they would not be out of business today, but they should have known that these were not good products.

Yet when you are faced with an issue regarding your house so many people go back to the bank, like Charlie Brown going back to Lucy and believing that THIS time Lucy is not going to pull the ball away. Well what is going to keep the bank from not pulling the ball away from you this time? Absolutely nothing.

I love that analogy; everyone remembers the Charlie Brown show and the comic books like you said. Another thing I want to point out too, going back just a little bit, you mentioned the lenders who put these home owners into these loans knew that they were not good loans. My thoughts after some of the mods that Ive seen, that you and I have seen doing the forensic audits, the home owner could have qualified for an FHA loan in those times, but it was so much easier for banks to put them into these sub prime loans because the documentation was easier, and it was just easier.

It is not just that they are easier; I know that your firm, Velocity Financial is FHA approved but what percentage of lenders today when, we probably have maybe 30% as many lenders as we had two years ago, what percentage today is FHA approved?

In the state of Arizona, of all the lending institution, less than 15% of all mortgage firm, banks, credit unions, less than 15% are licensed by the federal Housing Administration. Velocity Financial is proud to be one of those firms.

What I saw back in the peak of the market is of course everybody thought that real estate was going to go up for ever. Every body wanted to jump on board and buy 3,4,5,6 properties and I always tell the story that I knew we were in trouble, I knew we were hitting the top of the market long before I developed any of the models for Real Estates Future when I walked into our bank one day and I saw that they had a loan that was 100% financing for someone to buy an investment property and they didnt have to prove their income and they only needed a 620 FICO score.

Which considering everything now, I mean, to get a Fannie Mae loan today what kind of a FICO score do you need? If youre an investor? If youre an investor you need 720 and probably 20% down, at least 20% down and certainly it is not stated income anymore. No that doesnt exist, and significant cash reserves, the whole nine yards.

So these banks knew the kind of garbage that they were giving to people and yet we are supposed to trust them to get us good loan modifications. I think that in one of the later segments we are going to talk about the newest guidelines that just came out from Fannie Mae and Freddie Mac regarding their new fancy-schmancy loan mod program and to be honest with you I dont think it really does much for people at all. We will talk about that in the next segment and to the people who are in the mortgage or real estate industry or who have been in the real estate or mortgage industry it is going to sound a little bit like a comic bit because this might as well be bath tissue, I dont even know why they came out with it.

We are going to talk about that along with a few other things, so real quick I know we havent had too much of a chance to talk about The Foreclosure Sharks, Dan but we will touch on that a little bit later. How do people get a copy of this white paper, The Foreclosure Sharks these are things that people need to be looking out for?

Yes, for The Foreclosure Sharks you can go to my website, http://mortgageanswerman.com. There will be a link there you just click on it and pick yourself up a copy and it will help if you are in a foreclosure situation if people come knocking on your door it will help you to at least know what to look out for. So mortgageanswerman.com for The Foreclosure Sharks...

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