Obama: A Bold U.S. Plan to Help Struggling Homeowners

YOU DON’T NEED TO BE DELINQUENT TO SETTLE OR MODIFY. It might just be a good time to pick up the phone right now and call the servicer, trustee, or whoever is saying they have your loan (even though they don’t) and make a deal. Think about it first. Don’t be too generous to them and don’t be to greedy for yourself.  It’s true they don’t serve the home or the new mortgage, but if you can get the terms you need, and you get a court order confirming it, it won’t matter that the investors got ripped off in the deal. That’s not your problem.

Editor’s Note: Now that the plan is more fully described, hold the presses. It would seem that Obama got our message. This plan addresses all homeowners with securitized mortgages that were over appraised, and aims to keep them in their homes to avoid the obviously needless and lawless displacement that has been the rule up till now.
But don’t get lulled into complacency. The Banks are no more able or willing to give you that modification than they were before, with the possible exception of BofA. You still need legal weapons and ammunition, you most likely still need a lawyer, and you still need to get title quieted through a court order. It’s all possible if the settlement or “modification” agreement provides the right terms.
March 26, 2010

A Bold U.S. Plan to Help Struggling Homeowners

By DAVID STREITFELD

Will it work this time?

Once again, the federal government is adding to its arsenal of programs for troubled homeowners, seeking to help those who urgently need it while neither angering nor creating perverse incentives for those who do not.

The new measures, announced by financial policy makers at the White House on Friday, are among the boldest to date. They are aimed not only at the seven million households that are behind on their mortgages but, in a significant expansion of aid that proved immediately controversial, the 11 million that simply owe more on their homes than they are worth.

Some of these people, if the government plan works, will emerge with a house whose payments they can afford and whose new mortgage reflects its market value. Unlike many previous modification recipients, they would presumably be less likely to re-default, helping to stabilize a housing market that remains queasy.

“We’re walking that delicate balance to make sure these solutions are sustainable and not temporary,” said David H. Stevens, commissioner of the Federal Housing Administration.

It is a balancing act in numerous ways. If the plan falls short — and some experts were skeptical on Friday — the Obama administration could find itself having to start over yet again in six months or a year.

“The housing market is the Vietnam War of the American financial system,” said Howard Glaser, a housing consultant. “The federal government is in so deep, they have to keep ramping up to find a way out.”

The latest programs, together with foreclosure assistance efforts already in place, are aimed at helping as many as four million embattled owners keep their houses. But the measures, which will take as long as six months to put into practice, might easily fall victim to some of the conflicting interests that have bedeviled efforts to date. None of these programs have the force of law, and lenders have often seen no good reason to participate.

To lubricate its efforts, the government plans to spread taxpayers’ money around liberally. For instance, it had previously planned to give homeowners that sell their homes rather than let them go into foreclosure a “relocation assistance” payment of $1,500. The plan announced on Friday increases that amount to $3,000.

All told, the new measures are expected to cost about $50 billion. The White House was careful to stress that the money will come from funds already set aside for housing programs in the Troubled Asset Relief Program. There will be “no additional commitment of taxpayer dollars,” Michael S. Barr, an assistant secretary of the Treasury, said at the White House briefing.

Here is what the $50 billion is supposed to buy:

The simplest component of the plan involves assistance to unemployed homeowners. Mortgage companies will now be encouraged to reduce payments for at least three months and possibly six months while the homeowner pursues a new job.

To be eligible, borrowers must submit proof they are receiving unemployment insurance. The new payments will be 31 percent or less of their monthly income. The missing money will be tacked onto the loan’s principal.

A second and more complicated program is a requirement that mortgage servicers consider writing off a portion of a borrower’s loan to get it down to a more manageable level.

Borrowers in the government modification plan who owe more than 115 percent of the value of their home and are paying more than 31 percent of their monthly income toward the mortgage are eligible. The write-downs are to take three years, with the borrowers in essence being rewarded for making their payments on time.

The third major new program strays the farthest from the government’s previous approach. Borrowers who owe more on their homes than they are worth will get a chance to cut their debt — providing the investor or bank who owns the loan agrees.

Mr. Stevens of the F.H.A. said the program was “for responsible homeowners who through no fault of their own find themselves in a situation of negative equity.”

There is no official requirement that these homeowners be in distress, but it would probably make the investor more receptive to a deal. Whether homeowners will scheme to get into the program is one of the big uncertainties.

The investors will write down the loans to 97.75 percent of the appraised value of the property, at which point the F.H.A. will refinance them through new lenders. The F.H.A., which currently insures about six million homes, will insure the new loans as well.

If the homeowner has a second mortgage, as many do, the total value of the new mortgage can be as much as 115 percent of the value of the property. The F.H.A. will spend up to $14 billion to provide incentives to the banks that service the primary loan as well as the owners of the secondary loans. Some of the money will also provide additional insurance on the new loans.

Numerous parties will have to work together to make these deals fly. The primary loan might have been bundled into a pool and sold to investors during the housing boom. The investor must agree to cut the principal balance for a deal to work, and any bank holding a second mortgage on the property would have to go along, too.

The only incentive for the first lien holder is a quick exit from a loan that might ultimately default. Payments for second lien holders will be made on a sliding scale.

Early reaction to the refinance program among lending groups was less than enthusiastic.

“The magnitude of this program will likely be measured in the tens of thousands rather than the hundreds of thousands of borrowers,” said Tom Deutsch, executive director of the American Securitization Forum. Both banks and investors belong to the forum.

The Mortgage Bankers Association, which represents the banks that service the primary loans and own outright many of the secondary loans, warned that “each servicer will need to determine whether this is the best approach to help the individual borrower.”

The new proposals irked many people, who flooded online forums Friday. Some said those in trouble deserved their fate. Others asked why the government was propping up housing prices when many renters still could not afford to buy a house. And some wondered about the message these rescue plans were sending to those who resisted the housing bubble.

Dave Juliette, a software worker in Pittsburgh, is in the last group. He paid off his loan eight years ahead of schedule and now owns his house free and clear. “I’m a homeowner in a more genuine sense of the word than many of these people with mortgages,” Mr. Juliette said. “But I won’t be seeing a dime.”

Foreclosure Offense and Defense: Quiet Title Action

It is our theory that the real party in interest on the lender side is the owner of the asset backed security issued by the SPV. The security is usually a “securitized” bond deriving its value from the underlying mortgages of which yours is one. Thus a quiet title action against “John Doe” and served by publication might eliminate the mortgage and note. Here is a form which you can use at your own risk. It is probably wise to state rescission, fraud and offset as reason for the quiet title It is from a law firm in California:

    (Name, Address Of Party or attorney)
    ____________
    ____________
    ____________
    State Bar No: ______
    (____) _____ – ________
    Attorney for _______ (Or “In Pro Per”)

 

 

SUPERIOR COURT OF THE STATE OF CALIFORNIA 

 

COUNTY OF ________ 

 

 

[PLAINTIFF(S) NAMES]

Plaintiffs,

 

v.

 

 
[DEFENDANT(S) NAMES]

Defendants
________________________________
) 
)
)
)
)
)
)
)
)
)
)
CASE NO: _______
 
COMPLAINT TO QUIET TITLE TO REAL PROPERTY

 

Plaintiff complains and for causes of action alleges as follows:

 

FIRST CAUSE OF ACTION 

 

(For ________ Against ____) 

 

<>. Defendant__, ___ is__, and at all times herein mentioned was__, a resident__ of the City of ___, County of __, State of California.

<>. Defendant__, ___, is__, and at all times herein mentioned, was__ a Corporation organized and existing under the laws of the State of California with principle offices located at ___, in the City of ___, County of ___.

<>. Plaintiff__ is__ ignorant of the true names and capacities of defendants sued herein as DOES I through X, inclusive, and therefore sues__ these defendants by such fictitious names. Plaintiff__ will amend this complaint to allege their true names and capacities when ascertained.

<>. Plaintiff__ is__ informed and believes__ and thereon alleges__ that, at all times herein mentioned, each of the defendants sued herein was the agent and employee of each of the remaining defendants and was at all times acting within the purpose and scope of such agency and employment.

<>. Plaintiff___ is___ not and at all times herein mentioned the owner and/or entitled to possession of the property located at ____.


<>. Plaintiff___ is___ informed and believe___ and thereupon allege___ that ______, and each of them, claim___ an interest in the property adverse to plaintiff herein. However, the claim of said Defendant___ is___ without any right whatsoever, and said Defendant___ have___ not legal or equitable right, claim, or interest in said property.


<>. Plaintiff___ therefore seek___ a declaration that the title to the subject property is vested in plaintiff___ alone and that the defendant___ herein, and each of them, be declared to have no estate, right, title or interest in the subject property and that said defendant___, and each of them, be forever enjoined from asserting any estate, right, title or interest in the subject property adverse to plaintiff herein.

 

WHEREFORE, plaintiff__ pray__ judgment against defendant__ and each of them, as follows:

<>. For an order compelling said Defendant___, and each of them, to transfer legal title and possession of the subject property to Plaintiff__ herein;


<>. For a declaration and determination that Plaintiff__ is___ the rightful holder of title to the property and that Defendant___ herein, and each of them, be declared to have no estate, right, title or interest in said property;


<>. For a judgment forever enjoining said defendants, and each of them, from claiming any estate, right, title or interest in the subject property;


<>. For costs of suit herein incurred;


<>. For such other and further relief as the courtmay deem proper

 

 DATED: _______________  __________________________________________
   (Signature)

 

 

 

VERIFICATION 

 

 

I, ___, am a ___in the above-entitled action. I have read the foregoing___and know the contents thereof. The same is true of my own knowledge, except as to those matters which are therein alleged on information and belief, and as to those matters, I believe it to be true.

I declare under penalty of perjury that the foregoing is true and correct and that this declaration was executed at Long Beach, California.

 

 

DATED: _________________ ___________________________________

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