The Bank of America has been helping older people holding options adjustable rate mortgages (ARM) from losing their properties to San Diego foreclosed homes for sale.

The bank has adopted the reserve mortgage strategy. Industry experts explained that reverse mortgage is made available to older people in the form of equity loans. But senior homeowners do not need to pay the mortgage until after they die.

For example, a senior homeowner had a loan of $490,000 on a property that is appraised to be worth only $150,000 in the current market. About $405,000 of the amount was written down by Bank of America and it issued $85,000 as reverse mortgage. However, unlike a traditional reserve mortgage process, the bank’s strategy involves paying the proceeds directly to itself instead of to the homeowner. This means that the homeowner can stay in his house without making mortgage payments to the bank.

In the event that the homeowner dies, the property will be returned to the Bank of America. The heirs of the homeowner will be given the priority to purchase back the house for $85,000, excluding interest and fees. Or if the heirs opted not to buy back the house, the bank will then sell it and give any proceeds that exceed the loan amount to the homeowner’s family.

According to industry experts, banks are being pressured by the federal government to work with troubled homeowners to save their properties from San Diego foreclosed homes for sale. On the case of Bank of America, it has issued about 20 reverse mortgage loans with write-down feature to homeowners who are in direct circumstances.

Officials said that the bank is losing money in the process but explained it would lose more if they foreclose on a property and sell it in the current market. Home prices have been dropping drastically because of the foreclosure crisis. In fact, many homeowners whose properties are worth less than their mortgages are forced to reduce prices on their properties just to compete with cheap foreclosure homes.

Meanwhile, the U.S. Treasury Department said that it was able to meet its goal of starting trial loan modifications for about half a million borrowers by November 1. The program is part of the $75 billion initiative to control the spread of foreclosures across the country.

A series of foreclosure help workshops are being held across the country to help distressed borrowers meet and talk personally with investors and mortgage servicers of Hope Now alliance.

The government-sponsored enterprise, Federal Home Loan Mortgage Corp. of Freddie Mac has gone even farther in its effort to alleviate the effects of foreclosure by hiring Titanium Solutions Inc. to visit delinquent homeowners in their houses to gather documents and collect missing information that are needed to start the three-month mortgage modification under the Making Home Affordable Program of the Obama Administration.

Hope Now explained that the foreclosure help workshops which were held in Tampa, Florida and Boston, Massachusetts attracted about 1,800 homeowners who are at risk of foreclosures. The alliance said that in Boston, 781 homeowners showed up, with one out of three granted loan workouts during the event.

The alliance plans to organize additional workshops in Atlanta, Georgia and Southern California this month. Meanwhile, Freddie Mac has a list of workshops hosted by local and state governments and counseling organizations such as Hope Now to abate the growth of the foreclosure problem.

Meanwhile, Freddie Mac hired Titanium Solutions to meet troubled borrowers in the houses. Representatives from Titanium will help homeowners who want to save their properties from foreclosures by preparing and completing the requirements for the loan modification program of Making Home Affordable.

The company will also determine the kinds of documents that will be needed, secure signatures and assist distressed homeowners through the entire loan modification process. Company representatives are prohibited from accepting loan payments or any kind of money from homeowners to avoid fraud by con artists.

According to market report, about 3.13 percent of loans guaranteed by Freddie Mac were behind in payments for 3 months in August. The figures represented an increase from the delinquency rate last year. In July, 4.17 percent of loans guaranteed by Freddie Mac’s sister company, Federal National Mortgage Association were delinquent, an increase from the 1.45 percent posted for the same month a year ago.

Market data also showed that the number of prime loans that were seriously delinquent rose by 5.44 percent in the second quarter.

Subprime loan delinquency rate was 26.50.
Industry experts hope that the series of foreclosure help programs would help stave off the foreclosure problem in the country.

If you ask some homeowners, the Association of Community Organizations for Reform Now or ACORN as it is popularly known, has helped many of them save their properties from Fort Lauderdale foreclosure homes for sale.

Some residents in Fort Lauderdale and Pompano Beach said that ACORN has done a good job in providing assistance to disenfranchised and poor people. They praised the organization’s political advocacy and assistance on behalf of people in the communities it serves.

But others are not as grateful, calling ACORN a radical leftist organization that is out to destroy the way of life in the country. They believed that the organization is a scourge that should be eliminated.

Whatever the critics and supporters believe, it could never be denied that ACORN has reached a level of recognition it has never achieved in its 40-year of existence.

In Florida, the organization is manned by volunteers and six paid staff, a decline from 14 at the start of this year. The economic downturn has affected the organization in terms of financial support. The organization offers various services, including counseling to help distressed homeowners avoid foreclosure homes for sale in Fort Lauderdale and helping former prisoners to apply for the restoration of their civil rights.

Additionally, the organization helps people lessen their medical debt, navigate applications for government benefits and file for income tax credit.

The organization has a national budget of $25 million, with 10 percent taken from government grants. Nationwide, ACORN has 400 employees.

In Florida, ACORN’s budget for 2009 is $500,000, with no contribution from state or county. The organization was embroiled in a controversy following an investigation conducted by undercover conservative activists who posed as a pimp and prostitute. Video recordings showed that ACORN workers were giving undercover activists advice on how to evade tax laws.

The result of the undercover investigation prompted the Congress to stop providing federal funds to the organization.

The federal grant amounting to $125,000 has helped ACORN provide public housing assistance, including training on credit management and home ownership.

Meanwhile, Senator Chris Smith said that in Palm Beach and Broward counties, ACORN has been operating on the grassroots level. Volunteers of the group show up during community cleanups and meetings, feeding for the homeless and several protests.

The National Consumer Law Center (NCLC) has conducted a study of several state foreclosure mediation programs designed to control the growing number of houses in foreclosure. The study showed that the programs, which require conferences or mediations before homes could be placed on foreclosure sales, have an enormous potential to help troubled homeowners.

But the study noted that the foreclosure mediation programs are in great jeopardy because of the lack of accountability. The industry accountability shortfall is the same problem that has been dogging the voluntary mortgage modification programs of the federal government.

The study covers foreclosure mediation initiatives in 14 states, including Connecticut, Florida, Maine, California, Nevada, Michigan, Kentucky, New Jersey, Oregon, New Mexico, Pennsylvania, New York, Indiana and Ohio.

The NCLC study warned about the expectations that these foreclosure mediation initiative may be creating, especially to homeowners who are desperate to save their houses in foreclosure.

The NCLC pointed out the lack of data to confirm or show that foreclosure mediation programs have resulted to a significant number of sustainable and affordable home loan modifications. The group also said that the existing mediation programs have failed to impose significant responsibilities on mortgage lenders. It added that the absence of any obligation will not make mediation successful in terms of reducing the number of foreclosures.

The NCLC discovered that many foreclosure mediation programs lack mandatory rules, do not require lenders to provide information to substantiate the right to foreclose and fail to place sanctions for not complying with existing rules. The group added that the programs do not require analyses of mortgage modification alternatives.

Furthermore, the programs have imposed unreasonable procedural hindrances that limit a significant number of distressed homeowners from participating. To top it all, the NCLC said that in almost all foreclosure mediation programs, homeowners are left on the mercy of lenders.

The report concluded that foreclosure mediation initiatives play an important role in making sure that lenders comply with their federal obligations. For the foreclosure mediation programs to succeed in reducing the number of houses in foreclosure, the NCLC recommended requiring servicers to provide homeowners with documents showing their net present value and affordable loan modification calculations.

Stop foreclosure process has been the motto of New York Judge Arthur M. Schack, whose chambers are located in the State Supreme Court in Brooklyn.

Every week, Schack’s court processes foreclosure motions, but he has been rejecting many of them. He argues that he does not want to force out families from their homes into the streets if the reasons are not valid.

If he sees one key error in the filings, he rejects them. One of the cases he has rejected is a foreclosure filing signed by a Deutsche Bank officer claiming to be second in command in two different banks. According to the foreclosure papers filed, the bank executive works in Kansas City, Missouri, but his signature was authenticated by a notary public in Texas.

More significantly, Deutsche Bank did not own the mortgage when it foreclosed on the homeowner. Schack said he is just a little guy, but he said fairness should be exercised.

In the past two years that he had processed foreclosure motions, he has rejected 46 out of 102 cases. Along with his decisions are his criticisms of the lifestyles of bank presidents, their atrociously high salaries and the high interest rates imposed on loans.

Because of his decisions, Schack has attracted the attention of lawyers and judges across the U.S. In recent judicial meetings in Arizona and Illinois, several speakers lauded his court decisions as possible models for foreclosure rulings.

On the other hand, Schack has also earned the ire of bank officials, complaining that the judge blocks them from getting back what they rightfully own. One HSBC official appealed some of his rulings and remarked that the judge was setting dangerous precedents by rejecting motions even when the defaulting homeowners had not replied to the foreclosure notices.

In response to criticisms, Schack said that he is looking at foreclosure motions in a straightforward manner. He explained that if the banks cannot prove they own the mortgages, they cannot foreclose. Taking a family’s house must be done in a correct and legal manner, according to the judge.

Schack also reiterated that the multinational banks should also go through what small banks, credit unions and thrifts go through when filing foreclosure cases.

In 2007, Judge Schack started seeing foreclosure motions were particularly concentrated in the working-class black districts in Brooklyn. He said he studied the cases and found out that the banks made home loans bound to fail.

The residential real estate landscape in Miami Gardens, Florida is dotted with bank foreclosed houses. Driving along city neighborhoods, one could not fail to see bank foreclosed houses in various conditions, with some languishing on the market since last year.

These properties have become blights to neighborhoods, became favorite haven of criminals and pulled down values of surrounding properties. To address the growing devastation brought by foreclosed properties, city councilman Andre Williams has proposed an ordinance that aims to penalize banks for refusing to provide loan modifications to distressed homeowners.

According to Williams, the city has a 70 percent home-ownership rate. Market data showed that 13 percent of Miami Gardens’ properties were foreclosed, making the city’s foreclosure rate the highest in Florida.

On its part, Florida has a 23 percent foreclosure and mortgage delinquency rates. According to industry analysts, many failed loans in Miami Gardens are subprime mortgages. Williams and other city leaders said that most of these failed loans were issued by banks on clients they knew could not afford to pay the monthly mortgages.

Williams believed that lenders should boost their loan modification efforts to help more troubled homeowners avoid foreclosures and remain on their properties. Normally, local governments do not have legal oversight over lending companies or banks.

But under the ordinance proposed by Williams, if the number of foreclosures initiated by lenders surpassed or exceeded the number of troubled loans they have modified, the city has the option to pull its business or accounts from banks that failed to close the gap between their foreclosure activity and loan modifications.

Williams pointed out that taxpayers helped banks get back on their financial footing so now it is time for banks to do the right thing.

Despite grassroot support, it is uncertain if Williams could gather enough votes from the council for the approval of the ordinance. Critics of the proposed ordinance said that it would not do the city any good if it alienates banks and discourage them from doing business in the area.

Miami Gardens officials said that they do not have any knowledge about the percentage of homeowners who are at-risk of foreclosures who received loan modifications. But the increase in foreclosure rates indicated that only a few troubled homeowners were able to save their properties from foreclosures.

A partnership has been formed to help reduce the number of bank foreclosed home in Long Island, New York.

Investors led by Bedford Construction Group head James Vilardi plan to invest from $5 to $10 million to purchase about 50 troubled mortgages at bargain prices. The Long Island Housing Partnership will then try to reduce mortgage payments to make them affordable to borrowers.

The nonprofit-private partnership had already collaborated to purchase foreclosure properties to rehabilitate as affordable houses under the federal government’s Neighborhood Stabilization Program which was launched to help revitalize neighborhoods severely affected by the foreclosure crisis.

Long Island Housing Partnership Chief Executive Officer Peter Elkowitz and Vilardi have toured foreclosed houses in the area. Vilardi explained that the partnership’s goal is to buy troubled loans and modify them to help homeowners avoid foreclosure and remain in their properties. He added that the program is also a way to make sure that properties at risk of foreclosures would not become neighborhood blight.

Both Vilardi and Elkowitz explained that if the partnership controlled the troubled loans, it could be flexible in modifying mortgages, which may include extending the terms up to 50 years, reducing interest rates or temporary suspension of payments for homeowners who lost their jobs.

Elkowitz said that it would take a lot of work to determine the homeowners who are really in a dire situation and need immediate help. But the major priority of the partnership is to help families remain in their houses, he added.

Other investors purchased troubled loans in bulk, foreclose on them and sell. But the Long Island partnership is unique in that investors would act as lenders and collect interest profit from homeowners.

Under the partnership’s plan, homeowners have the option to refinance in the event that property values increase. Profits that will be earned by investors and repayments of homeowners will be used to buy more troubled loans from mortgage lenders.

Banking experts said that the approach may appeal to lenders, provided that the partnership buys the troubled loans at a reasonable and right price. But this is where the problem lies. Vilardi and Elkowitz claimed that since they started contacting lending companies and firms tasked by the federal government to purchase toxic debts, lenders have been asking for high prices. Furthermore, the partnership is expecting limited power on the type of loan it can buy.

Industry analysts said that thousands of distressed homeowners are trying to avail of loan modification to help them meet their monthly mortgage payments and avoid turning their properties into foreclosed homes.

However, they pointed out that loan modification is not easy to obtain. Many of them encountered problems such as long waiting times, arduous volume of paperwork and fraudulent services that many of them often end up in foreclosures anyway.

To ease the ordeal of getting a loan modification, industry experts advise distressed homeowners to understand the process first before having their mortgages altered into affordable payment terms.

They explained that a home mortgage modification is given only upon the approval of their lenders. The process works towards altering some of the loan terms in order to make the mortgages affordable to pay.

In California, a home mortgage modification program involves altering troubled loan terms by means of either reducing interest rates or principal loan amount, changing the amortization schedule or other ways that could lower monthly payments to not more than 38 percent of the ratio of the borrowers’ debt-to-income.

Experts pointed out that a loan modification is not similar to refinancing, with the latter involving the issuance of a new loan to write off the old home loan mortgage. They advise homeowners to seek the help of professionals immediately as soon as they feel that they would not be able to meet their mortgage.

There are counselors approved by the U.S. Housing and Urban Development (HUD) who give free advice on how to avoid foreclosures and could help homeowners negotiate with their lenders.

Additionally, homeowners could ask referral from their relatives or friends or from anyone who had successfully completed the modification process. As each bank’s modification process is different from one another, homeowners should make sure that a representative from the bank explains the process to them.

The goal of understanding the loan modification process is to make sure that homeowners come to the negotiating table prepared and knowledgeable so that lenders would immediately take notice that they are serious about saving their homes from foreclosure and are willing to go through the entire process.

That is why industry experts also recommend that homeowners organized the required documents necessary for obtaining a loan modification before sitting down with their lenders.

The Michigan city of Grand Haven has provided hope for financially-strapped homeowners who want to buy homes but do not have the money to do so and for those who defaulted on their mortgage payments.

The Neighborhood Housing Services (NHS) of Grand Haven is touted as a Department of Planning and Community Development program that helps a lot of homeowners. It provided grants for both homebuyers and homeowners in the city.

The program also provided housing counseling service for all residents of Ottawa County. These services include pre-buying homebuyer education courses and protecting properties from becoming foreclosure houses.

NHS Neighborhood Development Coordinator Char Seise said that the biggest obstacle facing the program is disseminating information to distressed residents that help is provided to allow them to buy properties, repair their homes or avoid foreclosures.

She noted that the current economic downturn and housing crisis has affected people from all walks of life, adding that no one is exempted. She pointed out that many people who needed the NHS services are in situations that were created by mitigating circumstances such as job loss, sickness or divorce.

Seise said that while working with NHS, she observed that many people who seek their help do not know how to budget. She adds that the service teach these people how to create spending plans and to make wise consumer choices.

She pointed out that many people, especially those who have just experienced financial constraints, do not have any idea whom to turn to and the resources that are available for them.

The Planning Department created the NHS when it made affordable housing its priority. Seise recalled that during that time, the biggest obstacle facing the program is determining the meaning of affordability to the community.

Affordability, as defined by the U.S. Department of Housing and Urban Development, means spending not over 30 percent of the individual’s gross income on cost of housing.

The housing program was able to obtain about $180,000 under the Home Purchase Rehabilitation Program of the Michigan State Housing Development Authority.

The state grant is used to help eligible buyers acquire properties in an area in Eastown. Most of the older homes in the designated area are fixer-uppers.

The program’s foreclosure prevention and intervention counseling services include financial options and management with the goal of helping individuals hurdle obstacles and remain in their properties.

Distressed homeowners can improve their chances of getting favorable loan modifications from their loan servicers by submitting relevant and complete documents and by knowing their rights as consumers and as borrowers, according to Diane Thompson, counsel to Boston-based nonprofit National Consumer Law Center.

Recently, Thompson testified before the U.S. Senate Committee on Banking, Housing and Urban Affairs on behalf of NCLC and the National Association of Consumer Advocates concerning the barriers faced by distressed homeowners in accessing the Hope for Homeowners Program and the Making Home Affordable Program to save their homes from foreclosure.

Thompson warned homeowners that they will encounter long waiting times on the phone and will most often not reach the same loan employee they have previously spoken with.

Loan modification applicants are advised to keep written records of all contacts with their loan servicers, including phone calls, emails, letters and other papers provided by the servicers.

Borrowers are also advised not to believe promises not put in writing. If the servicer promises to modify a loan, the borrower should ask the servicer to put it in writing. If a foreclosure sale notice has been given and then a promise not to proceed is later made, the borrower is advised to attend the scheduled foreclosure sale and ensure that the home in question is really not included in the sale.

Home loan borrowers are also advised to provide a written request to their loan servicers to give them a copy of their complete loan payment records. Borrowers need to examine the records for charges not clearly defined and then write letters of complaints or inquiries to the mortgage invoice address under Real Estate Settlement Procedure Act or RESPA requests. RESPA enumerates the responsibilities of loan servicers to their borrowers.

Borrowers applying for loan modifications should also make a written request to their loan servicers and ask them the name of the entity that holds their mortgage loans. This request will warn the loan servicer that the borrower is serious in pursuing a loan modification and will leave the servicer with no argument about the real ownership of the loan.

Lastly, according to Thompson, homeowners should contact nonprofit housing counselors or volunteer lawyers offering legal assistance for free if they feel their loan servicers are violating consumer rights or certain provisions of the federal foreclosure prevention program. They should not make deals with private mortgage modification companies that charge high upfront fees.