Mortgage News: California Owes Millions to Borrowers
by Al from Memphis, TN and by Tina from Atlanta, GA
Ask Kate about 2015 National Mortgage Settlement news and why California is obligated to repay struggling borrowers $331 million: Remember that $25 billion settlement in 2012 due to ummm...... loan servicing corruption? If you're a resident of the Golden State, you'll recall that California received a significant piece of the pie. Yet today, over 800,000 homeowners are still in distress.
2015 Mortgage News: California Owes Millions to Troubled Homeowners con't...
In that light, the courts have determined that California wrongly siphoned off $350 million to prop up their own budget.
Now the state is obligated to repay $331 million to struggling borrowers to help save homes from foreclosure.
Probably a few other states are guilty of the same shenanigans so I'll be following this story to bring you updates as more news emerges.
You can brush up on the settlement history at 2013 National Mortgage Settlement Update
and JPMorgan Settlement Brings Mortgage Relief
Also on this page, meet Al from Memphis, TN with a question about 2nd mortgage subordination and Tina from Atlanta, GA who asks about principal loan reductions.
HARP Refinance with a 2nd Mortgage By Al from Memphis, TN
My husband and I are planning to refinance via HARP program.
We also have a 2nd mortgage (Both the 1st and 2nd are through Chase).
Can you explain what is meant when it says that the 'junior lien holder must agree to remain junior' for us to qualify?
Kate's Answer: HARP Refinance with a 2nd Mortgage
HARP guidelines only address 1st mortgages. So if a homeowner has an existing 2nd mortgage (aka junior mortgage), it cannot be included in the refinance process.
However in order to close your HARP refi, the junior mortgage lien holder must agree to remain in its recorded position as the second lien on your property. Otherwise, the 2nd would slip in front of the 1st mortgage when your loan records at the County Recorder's office, giving it the coveted position for getting paid off first in the event of foreclosure.
In other words, the 2nd mortgage lender must agree to subordinate their interest to the 1st mortgage lender.
Understanding the Mortgage Loan Subordination Agreement
This action requires a subordination agreement and can get sticky. Learn how to handle mortgage subordination by going to these Ask Kate answers...
HAMP Tier 2 with Principle Reduction Alternative By Tina from Atlanta, GA
Advance apologies for my ignorance here. There seems so much to understand, I am completely lost and overwhelmed.
Here is a summary of the saga, I'd so appreciate any advice you may have.
I purchased a home in July 2007 and then got a modification in 2009 after an income reduction and property value loss.
I have further reduced income now and am paying over 70% to my modified mortgage payment, PMI ($700), and property taxes.
I qualify for the above and have submitted my modification request to Indymac. However, they say my chances of receiving this are low although I fit all the requirements.
My home value is around $220K less than purchase price after 8 years. My W2 income is $5100 per month.
I am a single parent and this is the only property I own. I want to keep my home and qualify for this program but how do you make the bank agree to this adjustment?
I know it's a lot to ask but any guidance you can offer would be so appreciated. THANK YOU for sharing your knowledge.
Kate's Answer: HAMP Tier 2 with Principle Reduction Alternative
These's no reason to apologize. The mortgage industry is like the "What's Wrong With This Picture" children's game except it's not amusing to homeowners.
Obviously, after reading your letter, I am left asking WHY Indymac claims they are not likely going to modify your mortgage if you meet all of their requirements!
So roll up your sleeves and get to work because no one else is going to care enough about your home to follow these suggestions. But you can do this!
How to Hold Your Lender's Feet to the Fire
First, call back Indymac and don't let them off the phone until they have given you the details of your loan denial. Then jot down the person's name and extension after requiring them to mail you the denial in writing.
Once you have the document (assuming they really send it), you'll need to determine if their denial is justified or if they made mistakes while underwriting your qualifications.
If they made mistakes, initiate the process of calling, nagging, and holding their feet to the fire to keep your loan request alive. Document all conversations and keep copies of any paperwork they request from you.
What to Do If Your HAMP Modification Hits a Brick Wall
If and when you hit a brick wall, inform the lender of your intent to contact the Consumer Finance Protection Bureau as well as your elected government advocates.
Then do it! A real hassle, I know, but I've made it easier for you.
Go to How to Contact Washington DC, Your State Government Officials and the Consumer Finance Protection Bureau
to enlist their help.
But first, read these three pages on my website to beef up your knowledge...
I'll be cheering you on,
Have You Seen These Ask Kate Answers
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. Or post a quick comment or related question by clicking the link near the bottom of this page
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