victoriayhul: foreclosure help

The big bank servicers basically push the borrowers up against the wall, demanding immediate payment, foreclosure, or some alternative modification scenario. The alternative mod is attractive to the servicers, especially if they tack their late fees or principal forbearance onto the unpaid principal balance. This jacks up their servicer fees, which are a percentage of unpaid principal balance. They get to put the borrower in a less-attractive alternative mod, which has no transparency or safeguards, and could easily be another predatory lending scenario. The private mods are far less generous than HAMP mods, and expose the borrower to a far greater potential for default. As banks have learned how to navigate the HAMP system and use it for their own ends, this has become the default mode. 147,000 borrowers received modifications last month, only 28,000 through HAMP.

This conflicts with the claims from the banks that borrowers in delinquency are “deadbeats” who would surely have to give up their homes no matter what. In fact, these people are desperate to keep those homes, and often find a way to do so, accepting whatever modification they can. And for the most part, they’ve stayed current on those modifications. The point is that a legitimate government program for loan modifications would be successful and not result in mass defaults. As it is, many borrowers get shuffled off into these private modifications, and are probably getting abused by them.

I don’t want to suggest that all borrowers behind on their payments are somehow getting modifications; the data shows that banks are only modifying a small percentage, either through HAMP or private mods. And there are definitely a subset of borrowers who won’t be able to afford mortgage payments of any kind.

The main point is this: banks are justifying their fraudulent foreclosure operations by saying that most borrowers would default anyway. But borrowers who have sought help through HAMP are proving that wrong. They’re either getting a HAMP modification, get pushed into a private modification, or somehow move heaven and earth to pay off the loan. People are extremely attached to their homes and will do what it takes to stay in them, if they get the chance. The big bank servicers foreclosing on them in a grab at short-term profits, helping to sink the economy in the exchange, are not engaging in the inevitable. And the bias toward private mods over the HAMP mods show merely that the servicers aren’t as interested in modifying loans as they are in juicing their profits.

UPDATE: I should add that the most widespread action on delinquent mortgages has been no action at all. Often servicers take over a house in foreclosure without then putting it on the market. This is known as “shadow inventory,” and it’s been growing, up 10 percent in the last year to 2.1 million units, about 1/3 of all unsold housing inventory nationwide.

I am always disheartened to see articles or blogs about title insurance in which the bloggers or commenters obviously know so little about what they speak of. Title insurance is one of the best deals going for consumers for many reasons.

When people say title insurance is a scam or pays out so little or that title insurers take on no risk, it is clear they do not understand the product or what it does. It is not good to fail to understand something and then spread the misunderstanding publicly, as has been done here. For your information, some title insurers are now reserving up to 10% of premium for losses, due to the economic times. Latest figures for property casualty are in the 60’s. Why the difference? A little bit of research will show that title insurance is a claims AVOIDANCE line of insurance. Like boiler insurance, where boilers are inspected to make sure they will not blow up and claims are very low (thank goodness!), title insurance operates in much the same way. Do you know people who want a title claim on their house? Their most important possession? Of course not! So title insurers search the title to property, as well as numerous court and other records to discover AND FIX problems with the title BEFORE closing. In fact, in about 40% of all transactions, a problem is found and identified prior to closing. That means the claim is resolved beforehand and the consumer never even knows it happened! What a great service!

Please reread what I just said so that it’s clear. The majority of claims happen before the closing because problems are identified and fixed so that consumers will not have to suffer through most claims later on as homeowners. Many of these claims involve recent problems with title, such as lenders who failed to release mortgages of record. Others pertain to foreclosure issues, tax problems or other types of liens. Most are found, fixed and resolved before closing.

What title insurers do is the equivalent of the homeowner’s insurer cutting a tree branch before it destroys the roof of the house or the auto insurer fixing a car’s brakes before they go out and cause an accident. They save heartache, trouble and avoid most claims. I would argue that is more valuable to consumers than other types of insurance that allow the claim to happen. Most of the premium goes into this claim avoidance and curative work which is performed, usually, by the title insurance agent, who gets most of this premium as compensation for the important work performed. That is why there is less paid out with title insurance than other lines. Which way would you prefer? Put less into claims avoidance and let the claim happen to most American families or spend most of the premium dollar to fix the problem up front and help people avoid a title claim? It’s a no-brainer.

Moreover, I’m sure you discovered that title insurance is not paid annually like other lines of insurance. It’s paid only when you purchase or refinance a home. Let’s say you pay $1,000 for title insurance and $1,000 a year for homeowners and auto. You own a home for 15 years. Over that time, you pay only $1,000 for title and maybe up to $100 gets paid out in claims for matters not identified and fixed prior to closing. So you spent $900 to resolve most of the title problems beforehand, which was good for 15 years or $60 per year. Does that sound overpriced to you for insuring your most important asset? Now look at what you would pay for auto and homeowners. For 15 years, you would pay $15,000 to each company and they would pay out (at 60%) $9,000. (This is generous since many people (like me) never had a claim at all on homeowners and only minor auto claims). In any event, the homeowner wound up “losing” $6,000 over 15 years which comes out to $400 per year. Now which type of insurance is cheaper? It’s obvious to see title insurance is the better bargain.

Furthermore, and this is the clincher, you may not know that the existence of title insurance saves homeowners approximately $16 billion per year in the United States in lower lending costs (per information put together by the American Land Title Association). Because of title insurance, US lenders have less risk and are willing to give mortgages at lower costs than in other developed nations where title insurance doesn’t exist. This is an added monetary benefit of title insurance. I could go on and tell you how title insurers collect hundreds of millions of dollars in child support and delinquent tax and other payments, but I think you get the idea.

As far as title being overpriced, I haven’t heard consumer advocates saying that as much the last couple of years with thousands of supposedly overpaid title insurance agents going out of business due to the economy. We have lost some title insurers, as well, and most lost money two years in a row. Title insurance is a cyclical business and if it was so easy to make money, there would be many more than four national families of title insurers.

Apparently, some people would prefer that title insurance doesn’t exist and that nearly 50% (remember problems are found in title in 40%of all transactions before closing plus another 5-10% later) of homeowners have a title problem that could take thousands or tens of thousands of dollars to fix (plus attorney fees and litigation costs!) and put ownership of consumers’ homes at risk. They also want lenders to assume the risk of a title defect, thus forcing lenders to raise interest rates on every loan. The result would be that consumers would pay far more for mortgages than they would ever save by not paying for title insurance. Throw in the risk to 50% of consumers’ homes and you have an expensive, gut-wrenching and potentially devastating hardship created for American families. You still think title insurance is not valuable?

http://www.complaintsboard.com/complaints/alpine-payment-systems-c270446.html

victoriayhul

Monday, November 29, 2010

foreclosure help

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