According to a report on http://ml-implode.com/ 6 of the 25 top sub prime lenders have closed the doors or been taken over. The lenders that Aaron Krowne reports are either bankrupt, nonexistant or have been taken over are:
- First Franklin
- OwnIt
- MLN
- ResMae
- ECC/Encore
- Fieldstone
According to his reports and his informative website, many lenders are falling suit. This is not a surprise considering the number of foreclosures are still on the rise. Lenders are beginning to feel the pinch of this hurting economy. A lot of homeowners that were approved for loans between 2003-2006 did not qualify. With not enough qualified borrowers, lenders were creating new ways to get these people approved, whether right or wrong.
With the huge popularity of ARM’s and Interest Only loans homeowners were rushing out to refinance or purchase when previously they weren’t qualified. Lender guidelines were relaxed and homeowners were put into a position they shouldn’t have.
I see that some people are of the opinion that this was the homeowners responsibility. I do agree but only to a small degree. Yes, a homeowner is responsible for reviewing the documentation of the loan and the terms. Most of us will agree, however, that we are not borrowing experts. In fact, a lot of the new homeowners are first time homeowners. If we knew what to look for and who to go with why would we need mortgage brokers?
I have seen too many homeowners fall victim predatory tactics like having to sign papers and review everything in 15 or 20 minutes because they have told the homeowner there is a deadline for the paperwork. Don’t get me wrong! Not all mortgage brokers will do this. In fact, most won’t. But there are a few bad seeds that will do anything to get the loan through including overstate income.
I read an article the other day that said 90% of all stated income loans were over stated a minimum of 5%. Of that 90%, 60% of those loan applications had income overstated higher than 50%. Apparently none of these particular cases were checked against the borrower’s tax records with IRS. Now this study was apparently done on 100 random loans using stated income.
I don’t know about anyone else but I know this is not the end. We have not seen the worst of our situation just yet. With lenders dropping off like flies and more following, we are going to see the Foreclosure filings increase. Fortunately many lenders are aware of this also and have taken proactive steps to work more effectively with third party negotiators to help resolve these issues.
The best advice I can offer homeowners that aren’t currently facing Foreclosure is SAVE, SAVE, SAVE! Put away enough money for emergencies and have a little to fall back on. When an unforseen event arises you will be prepared and will have the ability to bounce back quickly. If a car breaks down or you have an illness in the family without having this back up it is possible you will end up in a preforeclosure or Foreclosure situation. Protect yourself and start putting 7% of your earnings in a savings account just for emergencies. Once you have saved up enough for at least two months you will have a less difficult time staying on track.
Written by: Donna Atwater (CFreedom), If you are facing Foreclosure or experiencing mortgage difficulties we can help. Fill in our short contact form and one of our consultants will contact you for a free, no obligation consultation to discuss your options.
Freedom Foreclosure Prevention Services and their CEO Jeff Segal have set an industry example of ethical Foreclosure prevention practices. With foreclosures on the rise there are scammers seeping through the cracks. It is more difficult for homeowners to find the right company to help them avoid their Foreclosure.
Recently I spoke with Jeff Segal, the President and CEO of Freedom Foreclosure Prevention Services (FFPS), and asked him what homeowners should be concerned with the most when looking for Foreclosure prevention services. He had this to say:
“The first thing a homeowner should do is get the legal name of the company offering to help. Also, ask about the President or Owner of the company. Homeowners need to realize that they are trusting someone with their home, their livelihood, their family. Now is not the time to act quickly no matter how rushed they make you feel. Take time to research them thoroughly and find out how long they have been in business. To do this simply ask what state the company is registered in. Each state has a Secretary of State department in which you can run a check. If there isn’t a record of their articles of incorporation or articles of organization they are probably one of what we call ‘pop-up’ companies. They pop-up overnight and blast things all over the internet to appear as though they have some presence and when they get your money they run.”
“The next thing you should do is check their BBB record. It doesn’t necessarily matter that they are members but rather what has been reported on them. Now some companies may not appear at all which may give you the false sense of security that they are a-ok. This is not usually the case. It takes some time for the BBB to file the actual complaint and post this on their internet database. Usually a company without any record usually means they haven’t been around long enough.”
“Anyone can get a website or a blog and create press releases. You need facts about the company. You need to know their legal name and CEO’s name or President. These companies will hide behind their websites and give the impression that they are an actual company when infact they could be working from a basement with no previous knowledge of the business they claim to be in. With the internet housing so many legitimate businesses it’s easy for someone to come along and copy information and appear to have the same knowledge or support that a 10 year old company has. Make sure you get a number for their corporate offices and can speak to an actual person. They have virtual offices now that if you call an 800# you will not get an answer but rather an option to enter an extension or reach someone in the company directory. Once you enter an extension this call is then rerouted to someone’s home telephone number. Do your due diligence on the company that you are working with.”
“Thirdly, before giving them any information about your situation you should ask them what they think the best alternative is for saving someone from Foreclosure. If anything they say involves anything other than loss mitigation or directly negotiating with your lender then run the other way quickly. Some homeowners may not qualify but before they have your personal information, an ethical company will tell you that the first and most advantageous solution is loss mitigation (sometimes casually generalized) or specifically negotiating with your lender. Now again, business men aren’t usually stupid. Some will know to tell you this to get you in the door. This is where your previous research will come in handy at helping you make an informed decision.”
“Lastly, you want two things in writing before paying a dime. One, they offer 100% guarantee if they can’t save your home using the services specified in the time alotted. You want a company that will part with ALL of your fees 100% if they did not fulfill their end of the bargain. Second, you need to have the specified services they are to perform for you in the contract as well. Do not accept a contract that says they will perform ‘one of the following services’ without specifying exactly which one.”
“It is imperative that homeowners do their research. I can’t tell you how many homeowners come to us after a situation like this has turned ugly. Most of these companies are looking to get their foot in the door only to try and steal your home or your equity. Sometimes when a homeowner has undergone such disgusting representation it is too late for an ethical, above board company to offer them help effectively. These homeowners have been drug along thinking they were being helped only to find that essentially all their time has been eaten up and their house is slipping through their fingers.”
“After many years we’ve seen the worst of what these people have done and the blazing path of dreams they have left behind.”
“My best advice - take your time and do your research. If you are facing Foreclosure you deserve someone on your side that truly cares. We wouldn’t approach a Foreclosure situation any other way. We enjoy the lasting emotional elation that our clients feel after their home has been saved. We are in the business to help save Americans from homelessness, restoring faith, supporting families and helping others.”
In my research I have seen many a company but most of them appear to be what Jeff Segal referred to as “pop-up” companies. The others promote options such as short sales as a first alternative when, ethically, this should be the last possible option. Their interest appears to be in the bottom line and not the heart of the homeowners dreams. Freedom Foreclosure Prevention Services has proven to be one of the best in this industry.
