One in 240 California housing units was in foreclosure in April 2011, according to Realty Trac, a statistic that places California foreclosures about 2.5 times higher than the national average. Those statistics alone make the state a ripe market for loan modification scammers.
The Lawyer’s Committee is starting to file complaints against Nathanson Law Center and other alleged loan mod scammers. The suit claims that the defendants lured desperate homeowners into paying up-front fees to secure them loan mods, and then did little or no work to follow up on their promised services. While homeowners were offered 100% guarantees that their funds would be returned if a modification could not be obtained, the defendants later refused to turn their fees. Many of the victims lost thousands of dollars – or worse, their homes.
If you believe you have been the victim of a loan mod scam, you are encouraged to call (888) 995-HOPE or visit www.preventloanscams.org and click “Report a Scam!” Victims are being represented free of charge
New data was released on 9/22/10 by Treasury and HUD on the Home Affordable Modification Program (HAMP). Just over 33,000 homeowners received a PERMANENT HAMP modification in August, 2010. This figure is down 27% below the number of PERMANENT HAMP modifications in July, 2010.
The borrowers whom received the PERMANENT HAMP modifications have seen their mortgage payments drop by a median of 36%, or more than $500 per month. Homeowner’s who received these modifications saw their housing expenses fall from 45% to 31% of their monthly income.
In August, 2010, 26,628 TRIAL HAMP modifications were added to the HAMP roster. Currently there are 202,521 active trial modifications. Federal officials are pushing the loan servicers to make decisions for borrowers who have completed the trial phase and either drop them from the program or make them permanent modifications.
The Treasury stated that the most of the cancellations are due to insufficient documents received or missed or late trial payments. In addition, if their principal housing expenses are already less than 31% they do not qualify for the program.
The U.S. Treasury released statistics the end of July, 2010 for the Home Affordable Modification Program (HAMP) program. The statistics showed that loans that have been permanently modified had a re-default rate to be around 2% – 5.9% 60 or more days past due after modification and 1.7% 90 or more days delinquent. When those statistics came out, they received a huge outcry from analysts questioning the validity of these statistics.
The Treasury pulled the numbers and re-evaluated the statistics after retaining a third-party consultant to provide independent validation. A few weeks later, they corrected the re-default assessments as follows: 10% of six month old permanent modifications are 60+ days delinquent and 6% are 90+ days delinquent.
Analysts say that’s still too low and the rates will surely go higher the longer the program is in place. Up until six months ago, permanent modifications had been offered to only about 434,716 borrowers. The Treasury has cancelled the temporary modifications of 616,839 borrowers.
The analysts at Barclays are predicting a 60% re-default rate and Fitch Ratings projects 55-75%.