FIRST, read what another expert is saying about our real estate market.
This is an excerpt from an interview Steve Forbes did with Nouriel Roubini. Professor Roubini is famous for predicting the housing crash.
Talking points related to residential real estate:
1) He believes that prices are at the bottom. He is expecting another 5% drop in values on a national level.
2) 12,000,000 homes are currently underwater…negative equity…they owe too much.
3) Added to the 12,000,000 are another 8,000,000 who are nearly underwater…they owe almost what the house is worth. (Taken together, thats potentially 20,000,000 underwater owners) What does this mean….
4) If prices do indeed fall another 5% (as he and many others are expecting) that means there will be (as mentioned in #3) 20,000,000 underwater owners. Translated: There are 50,000,000 homeowners WITH a mortgage. So, if there is indeed another 5% loss in property value 40% of all owners with a mortgage will be upside down.
5) Roubini suggests that the only real solution to ending this housing crisis…is….negative equity forgiveness. What we are calling a ‘radical refinance’. Read Professor Roubini’s proposal..and share your thoughts..
I am not trying to scare you, but rather I would like to educate you. The following article about loan modification fraud is supposed to scare you!
Phony counseling or foreclosure rescue scams
The scam artist poses as a counselor and tells you he can negotiate a deal with your lender to modify your loan or save your house – if you pay him a fee first. The fee may be called a processing fee or administrative fee. He may even tell you not to contact your lender, lawyer or housing counselor – that he’ll handle all details. He may even insist that you make all mortgage payments directly to him while he negotiates with the lender. Once you pay the fee, or a few mortgage payments, the scammer disappears with your money.
Fake “government” modification programs
Some scammers may claim to be affiliated with, or approved by, the government, or they may ask you to pay high, up-front fees to “qualify” for government mortgage modification programs. The scammer’s company name and website may sound like a real government agency, but the Website may end with .com or .net instead of .gov. You may also see terms like “federal,” “HAMP,” “MHA,” “HARP” or other words related to official US government programs.
Contact your lender – always! Your lender will be able to tell you if you qualify for any government programs to prevent foreclosure or modify your loans. And you do not have to pay to benefit from these programs.
Forensic loan audit
The scammer who may be called a forensic or mortgage loan “auditor” offers to review your mortgage loan documents to determine whether your lender complied with state and federal mortgage lending laws. The scammer will usually require that you pay a fee to start the process. The scammer may say you can use the audit report to avoid foreclosure, accelerate the loan modification process, reduce your loan principal, or even cancel your loan.
There is no proof that a forensic loan audit can save your home from foreclosure, although it’s conducted by a licensed, legitimate and trained auditor, mortgage professional or lawyer. Even if you sue your lender and win, your lender is not required to modify your loan to make it more affordable. If you cancel your loan, you will have to return the borrowed money, which may result in you losing your home.
Bait-and-switch
The scam artist convinces you to sign documents for a “new loan modification” that will make your existing mortgage current. This is a trick. You actually just signed documents that surrender the title or deed of your house to the scam artist in exchange for a “rescue” loan. Thoroughly read any document before you sign it.
Rent-to-own or Leaseback scheme – Upcoming to be very popular
A scammer urges you to surrender the title or deed of your home as part of a deal that will let you stay in your home as a renter and then buy it back in a few years. He may tell you that surrendering the title will permit a borrower with a better credit rating to get new financing – and keep you from losing your home. However, the scammer may have no intention of ever selling the home back to you.
But the terms of these deals usually make buying back your home impossible. Worse yet, when the new borrower defaults on the loan, you’re evicted.
Variations:
1. The scammer raises your rent over time to the point that you can’t afford it. After missing several rent payments, you are evicted, leaving the “rescuer” free to sell your house.
2. The scammer offers to find a buyer for your home, but only if you sign over the deed and move out. The scammer promises to pay you some of the profit when the home sells. But the scammer simply rents out your home and keeps the profits while your lender proceeds with the foreclosure. You lose your home and are still responsible for the unpaid mortgage, because transferring the deed does not affect your mortgage obligation.
Short sale scam
Scammers, sometimes called “short sale negotiators” or “short sale processors,” may promise to expedite a short sale and usually require you to pay a fee, which is illegal in many states. Some scammers may even include surcharges or hidden fees before the transaction closes, which are also illegal in many states. The scammer may also misrepresent the value of the home to the lender.
A short sale may be a legitimate option for a homeowner in default or homeowner who is current yet the value of the home has fallen -- if the lender agrees to the short sale. But homeowners should only work with a licensed real estate professional or licensed real estate attorney since the law requires that the person be properly licensed to negotiate the short sale with your lender. Homeowners should verify licenses with their state licensing agencies.
Bankruptcy to avoid foreclosure
The scammer may promise to negotiate with your lender or get refinancing on your behalf if you pay a fee up front. Instead of contacting your lender or refinancing your loan, he pockets the fee and files a bankruptcy case in your name – sometimes without your knowledge.
A bankruptcy filing often stops a home foreclosure, but only temporarily. Filing bankruptcy stops any collection and foreclosure while the bankruptcy court administers the case. But, eventually you must start paying your mortgage, or the lender will be able to foreclose.
You could lose the money you paid to the scammer and your home. Worse yet, a bankruptcy stays on your credit report for 10 years, which makes it difficult to obtain credit, buy a home, get life insurance or even get a job.
Only one lesson to learn from this – don’t pay anyone for a loan modification or short sale! Plain and simple.
Recently, I verified three callers just within last week losing money to loan modification companies. Accept the truth, if you cannot afford the mortgage balance of your house, learn to let go.
Thank you for your inquiry, I am glad I am finally getting some of your attention concerning loan mods.
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Please send your inquiries, request for help to This e-mail address is being protected from spambots. You need JavaScript enabled to view it . Call Ken Go of Innovative Finance Group for future Real Estate needs, Financing, Refinancing, Loan Modification questions or Short Sales. Call Ken at (562) 508-7048.
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