MFI-Miami was featured in the Boston Herald
November 24, 2008 by admin · Leave a Comment
By Jerry Kronenberg, Herald Highlight: Mortgages
Monday, November 24, 2008
Mary Everleigh nearly lost the house she’s owned since 1986 to a fast-talking financier – until Stephen Dibert combed through her mortgage papers and realized the woman had fallen for a scam.
“Steve laid out all of the documents and said, ‘You know, what? Something isn’t kosher here,’ ” said Everleigh, a Michigan homeowner. “It was a big eye-opener for me.”
Dibert, a former loan originator turned anti-scam sleuth, is expanding his Miami-based
Mortgage Fraud Investigations into Massachusetts – apparently becoming the first loan “auditor” to set up shop in the Bay State.
“This is a service that’s definitely needed in the Boston area,” said Dibert, one of a handful of mortgage auditors who’ve opened across the country in recent months. “We feel that the whole Eastern Seaboard is definitely underserved.”
Mortgage auditors review customers’ loan papers for forged signatures, sham home appraisals or other illegal acts.
Any wrongdoing can strengthen financially strapped homeowners’ hands in negotiations with lenders.
Many customers are seeking “loan modifications,” where banks agree to cut homeowners’ interest rate or otherwise change mortgage terms to help homeowners avoid foreclosure.
Others want lenders to OK “short sales,” where borrowers sell homes in today’s weak market for less than their unpaid mortgage balances and banks simply “eat” the difference.
Auditors also check paperwork covering a loan’s “securitization,” the process under which lenders bundle up hundreds of mortgages into big bonds later sold off to Wall Street.
Large investors buy and sell mortgage-backed bonds like stocks, meaning that any given home loan can change hands a half-dozen times or more.
However, an investment firm that later wants to foreclose on someone’s mortgage must provide a chain of paperwork proving that it really owns the loan in question. Failure to produce an original of even one key document can get a foreclosure case dismissed.
“It’s Real Estate 101,” Dibert said. “In order to foreclose on a mortgage, you have to prove that you own it.”
Dibert, who’s worked in the mortgage industry for the past decade, launched MFI in June after friends kept asking him to check their loans for rip-offs.
“People were coming up to me and saying, ‘Steve, I think I got taken on my mortgage. Can you take a look at the loan papers?’ ” the 41-year-old recalled. “As more and more people started calling, I realized that I could make a business out of this.”
These days, Dibert performs about 100 checks on each customer’s loan, producing five- to 15-page reports and charging about $350 to $600.
The Florida man estimates that he finds problems as much as 90 percent of the time.
Common flaws include math errors on federal Truth in Lending Act forms, which by law must accurately list a mortgage’s total lifetime cost within $35.
While such mistakes can seem minor, they often give homeowners just enough leverage to get out of fraudulent loans.
For instance, Dibert recently helped a man who thought he agreed to pay $1,500 a month, but ended up facing roughly $3,800 in monthly mortgage bills.
August Blass of California-based National Loan Auditors thinks the housing boom led to lots of flawed loans because “things were going 1,000 miles an hour, so (banking) fundamentals were lost.”
MFI was quoted in Mortgage Daily
November 23, 2008 by admin · Leave a Comment
The paraphrased information about MFI-Miami has been boldfaced by me – Steve
Recent loan modification activity
Two organizations praised improvements to modification programs for conforming and government-insured loans. Two other firms are warning about the modification process and its players, while two service providers are offering products to help make the modification process easier for servicers. RediMod was launched by Lender Processing Services Inc., a press release Wednesday said. The new modular service automates mass modifications by automating loan eligibility and best-fit determinations without having to replace or upgrade core technology infrastructure.
“The solution includes data and analytics models that assign each loan in a portfolio a default propensity and loss severity score, as well as a highly configurable rules engine that identifies the borrowers who are delinquent or at risk of defaulting,” Lender Processing stated. “These loans then are run through a process that identifies the best possible workout option based upon factors, set by the servicer.”
ServiceLink said today that it provides loan modification solutions for a range of modification types — including rate resets, payment recasts and complex loan-term adjustments. Streamlined modification services include title and closing, valuation and a guarantee that the modification instrument does not impair the existing lien.
Billionaire Wilbur L. Ross issued a statement last week in support of the streamlined modification plan for conforming loans announced by the Federal Housing Finance Agency. Ross owns American Home Mortgage Servicing Inc. — the former servicing operation of failed American Home Mortgage Investment Corp.
American Home Mortgage Servicing, which serviced $85 billion as of Oct. 30, completed nearly 20,000 loan modifications from May through October out of 37,553 requested modifications, the statement said. The Irving, Texas-based company encouraged private investors, which own 90 percent of the loans it services, to support the streamlined modification plan on nonconforming loans.
HOPE NOW issued a statement today praising improvements to the HOPE for Homeowners program announced yesterday by the U.S. Department of Housing and Urban Development. Among the improvements was an increase in the maximum loan-to-value to 96.5 percent from 90.0 percent. Another enhancement was the ability to pay junior lienholders at the loan closing.
“Hope for Homeowners will now be an even more valuable and useful tool,” HOPE NOW said. “It is a worthwhile [addition] to the loan modification efforts that HOPE NOW members are using.”
An alert was issued by MFI-Miami LLC about criminally run loan modification companies. MFI, a mortgage auditing firm that also provides forensic mortgage fraud investigation services, said California and Florida are among the only states to regulate loan modification firms — though published reports indicate that Colorado now requires loan modification consultants to be licensed as mortgage brokers.
Among 10 factors MFI said should be scrutinized for modification companies were whether they contract work out, have an attorney on staff or guarantee their work.
Outreach Housing LLC released a statement last week calling on delinquent borrowers to be wary of loan modifications because borrowers are required to waive their rights. The company is prodding borrowers to let it help them find Real Estate Settlement Procedures Act and Truth-in-Lending Act compliance errors — which it claims to have found on 60 percent of the documents it has analyzed.
MORTGAGE RESCISSION: WHAT IT MEANS TO YOU
November 20, 2008 by admin · Leave a Comment
By Lisa Torelli McCue, Esq.
With all the talk of fraudulent mortgage loans these days, the right of rescission has become quite a hot button topic. Unfortunately, most of what people hear, either from so-called internet “experts” or even from misinformed attorneys, tends not to be entirely accurate. The most common misperception is that if you are able to successfully litigate a loan rescission case, you get to cancel the note (true) and keep the property free and clear (not true). Here’s how it actually works, and the practical effect of mortgage rescission on the borrower.
What is the Right of Rescission and when does it apply?
The right of rescission is the right to void the lender’s security interest in your home, thereby taking away their lien, foreclosure interest, and their leverage. This powerful right arises from the Truth in Lending Act (TILA), which was designed to provide consumers with accurate information about loan transactions in order to facilitate informed decisions. Certain TILA violations on the part of the lender may give the homeowner the right to rescind the loan.
This right, however, does not extend to all home loans. If the credit was used for the purchase of a home (a “purchase money mortgage”), the right of rescission does not apply. Common examples of rescindable transactions include: home equity loans, transactions that refinance purchase money mortgages, and home improvement loans or credit sales.
Is there a time limit imposed on asserting the right of rescission for TILA violations?
Yes. Borrowers have an absolute rescission right for three days following the transaction. This period may be extended for up to three years if certain “material” TIL disclosures were not provided correctly at the time of the credit transaction, or a proper notice of the right to cancel was not given.
What does a rescission mean to the borrower?
When the homeowner has successfully rescinded a mortgage transaction, he is obligated to tender the loan proceeds, or the fair market value of any property received. The tender obligation is the net amount owed after voiding all finance charges, interest, and other charges, and after crediting all prior payments directly to principal. These reductions can dramatically lower the principal amount, especially if the interest rate or fees were high, or if substantial payments have been made. However, it should be noted that the homeowner may have to come up with a large amount of money to fulfill his tender obligation. The homeowner must present a realistic tender plan to the Court if he wants to prevail in his rescission action. Some tender options include refinancing with a more affordable lender, obtaining a reverse mortgage (only for elderly homeowners), or selling the home.
Conclusion
Though mortgage rescission is certainly a valuable tool in certain circumstances, it is by no means a “free ride” or a one-size fits-all remedy. Keep in mind that litigation is expensive and there are no guarantees that you will prevail. Even if you do, you must be financially prepared to fulfill your tender obligation to the lender. In many cases, having your attorney negotiate a substantial loan modification with the lender (instead of exercising your right of rescission) may turn out to be in your best financial interests.
About the Author, Lisa Torelli McCue, Esq.
Husband and wife team, Lisa and Christian McCue of the McCue Law Firm, PA, have been Consumer Advocate Attorneys since 1995. They focus their Florida practice on consumer bankruptcy, credit defense, foreclosure defense, and personal injury law. In addition, they represent clients nationwide for loan modification and workout agreement negotiations under their subsidiary, www.homesaverplans.com. They can also be reached at 954-267-9377 or 1-877-938-9001.
Nothing Up His Sleeve…
November 17, 2008 by admin · Leave a Comment
My good friend, Paul Chandler wrote this editorial in his Mortgage Matters newsletter. I wrote a similar article but since Paul is a little more diplomatic than I am, I decided to post his instead. I called for Hank Paulson to be tarred and feathered like a British Tax Man in colonial Boston. -Steve
Nothing Up His Sleeve…
Back in late September, Treasury Secretary Hank Paulson, was beseeching Congress to pass a bailout bill and to pass it right away. Nicknamed the TARP [for Troubled Asset Repurchase Program], this legislation would save us from impending financial doom. It would allow the Federal Government to purchase bad mortgage loans at a discount and hopefully sell them at an increased value when things started to recover. But, a funny thing happened. The House of Representatives, listening to their constituents, said ”No.”
The Secretary wanted to be entrusted with $700,000,000,000 with the latitude he thought he needed to use it however he saw fit. After all of the arm twisting, groveling and earmarking was done, the House agreed with the Senate provided there was oversight and that the whole amount did not get released at once. Relief for homeowners facing foreclosure was to be part of the package as well. At least there would be some control.
You may recall watching episodes of the Rocky & Bullwinkle Show. One of the staples of the show would show Bullwinkle as a magician on stage with a small table and a top hat. Bullwinkle would ask Rocky, “Hey! Do you wanna see me pull a rabbit out of my hat?” “Sure!” Rocky would reply. And on with the show, Bullwinkle exclaimed, “Nothing up my sleeve! [while yanking off the sleeve of his tux and shirt] PRESTO!” Only instead of pulling out a rabbit, our hero had a hold on the head of a roaring lion. Never at a loss for words, Bullwinkle would say, “No doubt about it, I gotta get another hat!”
The TARP money has NOT been used for the purpose intended. Banks have used funds to acquire other banks, AIG—a large insurance firm—has received two chunks of cash, and has spent lavishly on a corporate function since then, and now the car companies are standing in line with municipalities and others with their hands out. Meanwhile, Mr. Paulson has stated that the problem was greater than imagined and that the intended purpose was not the best use for the money even though that was the pressure point applied in order to get the legislation passed. And now he wanted the rest of the money.
In so many words, Dennis Kucinich, a sub-committee chairman from Ohio, an area hard hit by foreclosures, presided over a hearing on Friday last which essentially said that maybe the balance of the funds should NOT be entrusted to Treasury. If the problem was too difficult to manage, then maybe the problem was the manager. [Obviously, I believe there are better ways to solve the problem than the ones selected by Mr. Paulson and his colleague, Ben Bernanke, Chairman of the Federal Reserve. I just hope Congress sticks to its guns on this one.] Perhaps, Rep. Kucinich suggested, it would be better to have HUD administer the funds for the purpose intended.
The whole point of the Bullwinkle story, is that Secretary Paulson promised a rabbit, delivered a lion, and now wants another hat. There were a lot of poor investing decisions, lending decisions, purchasing decisions and other decisions to go around. It almost seems that applying a sum of the earmarked $350,000,000,000 that remains to mortgage debtors’ loan balances would be a wiser use of the funds. It might get people into situations where the loan to values would be in line and would surely help the remaining assets perform well for the lenders and investors. But that might be too simple.
Paul Chandler, Certified Mortgage Professional, is the Newport Branch Manager for Universal Mortgage Corporation. He graduated from the University of Maine’s business school in 1979 and has been in the financial services industry ever since. Since 1991, he has exclusively been involved in mortgage lending, moving to the Newport area in 1993. He also authors a blog at http://www.misterva.typepad.com. He also has been a contributor to Mortgage Originator Magazine. If you have a mortgage related question, please call 802-334-1999.
