Desperate non-performing note buyers beware! More hurdles ahead
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Dion DePaoliPro Member
Real Estate Broker · Northwest Indiana, IN · Member since 2011 · 2k+ posts · 2k+ votesYea, well non-profits are not all cracked up to be what the article portrays them to be. The more you try and place these loan sales into those non-profits the more you will see private equity form non-profits buy the assets.
I personally feel, as stated in the article that the new sale guidelines offer a fair administrative solution to making sure the borrowers are getting a fair shake on debt forgiveness, restructuring and if all else fails foreclosure.
The other thing I don't like, in my experience I have had many supposed non-profits and even private investors romanticize the idea of investing in NPN's. It's all about how they will change the landscape and save borrowers, etc, blah, blah. The problem is, most of that is pie in the sky. The fact of the matter is many loans simply need to be foreclosed. In addition, a distressed family probably can't afford principal forgiveness. And third I am not sure there is a bunch of actual competency in the non-profits when it comes to working with distressed loans.
The senator's heart may be in the right place but the plan of attack is less than desirable.
29 Replies
- 10yDion DePaoliPro MemberReal Estate Broker · Northwest Indiana, IN · Member since 2011 · 2k+ posts · 2k+ votes
Yea, well non-profits are not all cracked up to be what the article portrays them to be. The more you try and place these loan sales into those non-profits the more you will see private equity form non-profits buy the assets.
I personally feel, as stated in the article that the new sale guidelines offer a fair administrative solution to making sure the borrowers are getting a fair shake on debt forgiveness, restructuring and if all else fails foreclosure.
The other thing I don't like, in my experience I have had many supposed non-profits and even private investors romanticize the idea of investing in NPN's. It's all about how they will change the landscape and save borrowers, etc, blah, blah. The problem is, most of that is pie in the sky. The fact of the matter is many loans simply need to be foreclosed. In addition, a distressed family probably can't afford principal forgiveness. And third I am not sure there is a bunch of actual competency in the non-profits when it comes to working with distressed loans.
The senator's heart may be in the right place but the plan of attack is less than desirable. - Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes10y
The NPN crowd buying from hedge funds will feel the effects. Notices these are the secondary, government insured assets, not all notes fall into this DASP program. Here is a bit more on the subject.
From portal.hud.gov
February 5th & 6th HUD SFNS 101 - Non-Profit Training Seminar Slides.
FHA Office of Asset Sales
U.S. Department of Housing & Urban Development
Washington, D.C.Telephone:
Fax:
Email:The FHA Office of Asset Sales was established to coordinate the disposition of defaulted FHA-held single family, multifamily, and healthcare mortgage notes. Under the Debt Collection Improvement Act of 1996, credit agencies with $100 million in loan assets are expected to sell certain delinquent loans. The asset sales program provides another disposition option for defaulted FHA notes to the conveyance claim process that requires foreclosure on the borrower and the sale of the acquired property. HUD has assembled a seasoned team of professionals with over $6 billion in whole loan and joint venture sales experience. John Lucey is the Director of the Office of Asset Sales.
The Single Family Loan Sale (SFLS) initiative intends to meet the mission and financial objectives of maximizing recoveries to the mutual mortgage insurance fund, reducing claim costs, minimizing the time that assets are held, and keeping homeowners in their homes. SFLS may include the sale of loan pools in designated geographic areas that are aimed at a neighborhood stabilization outcome (NSO) or NSO-targeted loan pools.
The Multifamily Loan Sale (MFLS) program is intended to reduce claim costs, increase the availability of affordable housing, minimize holding costs for multifamily properties, and maximize recoveries to the FHA insurance fund.
The Healthcare Loan Sale program is also intended to minimize claim costs and maximize recoveries to the FHA insurance fund.
Single Family Loan Sale November 19th Neighborhood Stabilization Outcome Pool Offering
Thank you to all of the teams that participated in the Department's November 19, 2014, offering. The results from that sale can be found here."
Bill's back!
Yes, when they are speaking of private investors, they aren't talking about me or Dion or Bob or John, they are talking about the mega boys that slice and dice the pools off to brokerages where ultimately small note players may buy.
Does this mean that notes will no longer be for sale?
Not really, I don't think. What it requires is a 12 month waiting period to throw a family out on the street. If a loan is not worked out through the process, what happens in the 11th month or the 13th month, if failure is the writing on the wall then it seems that dispositions of the remaining assets will go back into the most profitable venue, selling the asset or foreclosure as customary.
In the 11th month a list will probably be made, in the 13th month it looks like they are back to business as usual. That means a delay in the pipeline and probably fewer notes being available with mortgage workouts accomplished.
If you want to play, you can start a non-profit, if you're willing to do workouts over a year and you can qualify, those in large cities with foreclosure issues can also link up with city government to provide a solution. Might search a thread on BP; Profits in non-profits.
I've had heartburn as well over the mega boys playing both ends of the field, causing the problems then coming in the back door cleaning up the mess at a greater profit.This should slow the game down.
My feeling is much the same as Dion's and I'll add, small note investors jumping into NPNs with brokers, thinking they are learning notes, are simply being mislead. The note wizards!
My advice, stick to performing notes in the first place to start out, this NPN road is going to get bumpier. :)
I am from the Government and I am here to help.....
Sadly this will have unintended consequences. Some of the loans we bought had not been paid on for years, dragging this process out even more will only contribute to the decline of these neighborhoods.
When we take back a property we make it part of the community again, often investing thousands of dollars to get the property rent or sale ready. This investment is done without cost to taxpayers. Think of it as a suburban renewal program.
In the end I think the goal here is to squeeze out the small guy since we are probably not making enough campaign contributions for the politicians to care about us.
- Rental Property Investor · Clarkston, GA · Member since 2012 · 2k+ posts · 1k+ votes10y
I'm just the messenger and a poor one at that! What frustrates me re threads on NPNs in 2015 was too much guru talk: buy an NPN at 20% of outstanding balance, mail off to the (not paying) owner an off the cuff work out (30% off the payment, 30% off the principal) poof they sign and mail back all is well. They stop paying and you forclose. Poof simple as pie.
In BP threads thanks to Bill and other true experts, what's left out is that that work out is now a brand new mortgage that needs FULL Dodd Frank process; full doc, some DTI that you choose, an LMLO and a closing at an attorneys office. Few of these potential re-performing candidate borrowers will make it through full doc and DTI I suspect.
Selling these notes? OMG with the Dodd Frank liabilities?
I hope new NPN interested folks go read up on that in addition to this new bump in the road, there was already huge legal risks in the "re-performing mechanics you use".
@Bill Gulley anyone, can we post links to the past NPN threads that described the new insane complexity in properly taking an NPN through to being performing?
- Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes10y
Originally posted by @Curt Smith:
@Bill Gulley anyone, can we post links to the past NPN threads that described the new insane complexity in properly taking an NPN through to being performing?
I don't know, can we :)
You need to understand too that these requirements apply to institutional note holders, servicers, brokerages of government guaranteed or insured mortgages. A borrower can rely on the type of mortgage and originator, depending on the loan as to how their loan is to be treated and by whom. If I go to a bank I can expect my lender to be at least at the same level of sophistication and under regulatory requirements that my or a bank would be subject to, that's why I deal with banks and not loan sharks on a street corner.
So, while some bank originated mortgage may end up in the hands of a guy off the street, how he deals with me will have implied expectations, he can't just say, well, you're in default and you're out in the cold, I own your note.
But, if you look to seller financed paper, there are no such expectations and those notes are not subject to the same provisions being implemented. Those are installment contracts.
Pick your poison!
I'm driving the idea home, in real estate, be keen in '16! :)
- Real Estate Investor · Amherst, VA · Member since 2015 · 386 posts · 400 votes10y
Originally posted by @Curt Smith:
What frustrates me re threads on NPNs in 2015 was too much guru talk: buy an NPN at 20% of outstanding balance, mail off to the (not paying) owner an off the cuff work out (30% off the payment, 30% off the principal) poof they sign and mail back all is well. They stop paying and you forclose. Poof simple as pie.
In BP threads thanks to Bill and other true experts, what's left out is that that work out is now a brand new mortgage that needs FULL Dodd Frank process; full doc, some DTI that you choose, an LMLO and a closing at an attorneys office. Few of these potential re-performing candidate borrowers will make it through full doc and DTI I suspect.
"Certain changes to the loan’s terms, including, generally, workout agreements for delinquent borrowers, do not meet the definition of a “refinancing,” under § 1026.20(a). See § 1026.20(a)(4); comment 20(a)(4)-1. As comment 43(a)-1 makes explicit, such agreements are therefore not covered transactions and are not subject to § 1026.43."
Please explain. Everything I've read has indicated workout agreements, even more so workout agreements on loans originated pre-Dodd Frank, were exempt and were not an extension of new credit. Let us know where you've seen it was now "a brand new mortgage".
- Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes10y
Oh my gosh!
6th line down from the very beginning of that document.
What is the interpretation directed to? Successors in Interest, that is NOT the buyer of a note, that is an heir, a divorcee who has the right to "assume" an existing loan they were not a party to. In such situations those "assumptions" specifically granted by a lender or not, but who are successors in interest are not considered to meet the requirements of a refinance and the ATR!
An original borrower is NOT a successor in interest! Go screwing with the original borrower and changing the terms of the loan does require the application of the ATR requirements.
Amateur hour, where rulings are not fully read or understood and then misapplied to prove a point to an incorrect position.
When you have a borrower who is a successor in interest you can ignore the ATR, Reg. Z issues, if it's not a successor then the rules apply. :)
- Real Estate Investor · Amherst, VA · Member since 2015 · 386 posts · 400 votes10y
Stop talking about it and show us.
You're telling us every servicers and attorneys, who are paid to be compliant, are doing it wrong. I haven't heard one note investor out of the dozens I've been in touch with argue your point and apply it, so everyone is doing it wrong.
Show us the guidelines so we can follow them. You obviously know something that we have all missed.
- Rental Property Investor · Clarkston, GA · Member since 2012 · 2k+ posts · 1k+ votes10y
@Patrick Desjardins I hate to say something without the URLs or BP links into those past threads... There have been note investor conversations on this topic on BP. Try searching the note forum for dodd frank. Maybe Bill will post more links to the regs.
In layments terms, why is changing the numbers on a non performing mortgage make it NOT a new mortgage? New numbers to me = new mortgage.
- Business Owner/Investor · Millersville, MD · Member since 2015 · 191 posts · 71 votes10y
Curt the easiest way to explain it is with car notes. When you refinance your car note, you are refinancing it, thus generating a new note, but with a NPN, you arent "refinancing" you are "adjusting it on the fly" so to speak.
- Rental Property Investor · Clarkston, GA · Member since 2012 · 2k+ posts · 1k+ votes10y
>>You're telling us every servicers and attorneys...
So I closed a seller financed note at my favorite attorney's office and reading the note I saw 30 days past due the borrower is in default. I mentioned Dodd Frank's 120 days requirement and the Attorney just shrugged, saying they have the borrower sign a dodd frank compliant affidavit saying they agree to everything.
I don't know why Attorneys (and Doctors) are held up to be all knowing and perfect?
Maybe this 12 month waiting period is how the regulators (who just might be frustrated over this non compliance in the re-performing world) are trying to protect the borrower.
IE without full doc and ATR who's to say the non-paying borrower can actually afford the new note that is $100 off the old monthly amount and 30% lower principal? How was the new mortgage amount arrived at? There's no paper trail...
===
I'm not saying I agree with the regulators or layers of regs, I'm just being the messenger re what I believe to be true.
- Real Estate Investor · Amherst, VA · Member since 2015 · 386 posts · 400 votes10y
Originally posted by @Curt Smith:
@Patrick Desjardins I hate to say something without the URLs or BP links into those past threads... There have been note investor conversations on this topic on BP. Try searching the note forum for dodd frank. Maybe Bill will post more links to the regs.
In layments terms, why is changing the numbers on a non performing mortgage make it NOT a new mortgage? New numbers to me = new mortgage.
Changing numbers on the mortgage is not what most people do. Most people do forbearance agreements / workout agreements, which aren't recorded. They reference the original agreement. You said that work outs require all sorts of things including a closing, new loan docs etc.
I am anxiously waiting for someone to argue that they are a new extension of credit that require everything you mentioned in your first message.
Think about it. You and Bill are basically accusing all of us of illegally modifying people's mortgage and going against Dodd Frank. The minimum would be to substantiate it a little.
- Investor · Kingston, WA · Member since 2008 · 1k+ posts · 1k+ votes10y
I agree with both Logan and Patrick. Doing a workout with a NP borrower usually is a mod or forbearance, we do not modify the original note or DOT or Mortgage, which stays "as is", we just reference it in the modification agreement. I don't think that using an agreement that references a previous and still valid agreement (original note) is considered a new instrument that replaces the original agreements.
Curt's reference earlier and copied below seems incorrect since there is no "brand new mortgage" IMHO.
In BP threads thanks to Bill and other true experts, what's left out is that that work out is now a brand new mortgage that needs FULL Dodd Frank process; full doc, some DTI that you choose, an LMLO and a closing at an attorneys office
- 10yDon KonipolBusiness MemberInvestor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes
The more I read these posts, the more I believe my decision 8 years ago to bypass residential notes and originate and purchase only notes secured by commercial properties was correct - at least for me. Everything works until it doesn't. The loses for lenders and note investors who violate Dodd Frank laws and the regulations issued by the CFPB concerning these consumer and residential loans have only just begun to be counted. Why farm in a plot filled with land mines when safe land is right next door?
- Investor · Princeton, TX · Member since 2014 · 1k+ posts · 1k+ votes10y
All of that being said... do not take the word of anyone here. Get a lawyer and title company on the hook by paying them. Then if something goes wrong, go after them.
It is really very simple. Get a lawyer to certify the deal is Dood Frank compliant.
Of course... that means they have to draw up ALL of the paper work.
- Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes10y
Those saying I ever said you need to provide a new note and security agreement, if anyone is saying that, is incorrect. The new extension of credit is by a modification agreement, that does not mean drafting a new note.
Dodd-Frank refers to an "extension of credit" that means any note, any forbearance agreement, any modification agreement or any other document that creates a financial obligation with new terms and conditions.
For the layperson, start here.
http://portal.hud.gov/hudportal/HUD?src=/program_o...
Patrick, I never said servicers or attorneys are doing it wrong and frankly I really doubt you know what servicers and attorneys look into during the process unless you worked for one. Sitting in the lobby while they do a modification and handing you the agreement doesn't really clue you into what the do in the backroom.
The issue is usually around note players who jump into buying notes who "self-study" the world of finance without any formal education/introduction and assume they know what the might be reading or assume some myth or folklore from some broker is correct.
When you modify an existing loan with a borrower you need to do so considering the ATR rules, you'll see income, employment, etc. in the HUD link, that is part of the underwriting for the ATP aspects.
What is being claimed, not having to follow the ATR rules isn't even logical, why would you think after they established the ATR rules, that just anyone could make up new agreements, at their whim, with anything they may agree to, without consideration to the borrower's ability to pay and meet the new terms and conditions......what kind of thinking is that? What makes you think by having a borrower agree to an extension of credit that they can actually meet those terms? Borrowers will always think they can under pressure given another chance.
Prior to the DF Act, lenders who modified a loan did so in compliance with underwriting guidelines, the thought of a lender not qualifying a borrower for new terms is beyond me, just absurd thinking, but that seems to be the thinking of "note buyers" playing investor.
If you want to know more about servicers, this gives some insight:
http://files.consumerfinance.gov/f/201301_cfpb_fin...
http://files.consumerfinance.gov/f/201301_cfpb_fin...
The tendency of some is to read what they think they want to read, like ahh, here it is, this is what I want to see......and not have a clue as to what section or applicable ruling they are looking at. Searching in that manner usually won't allow you to find what you really need. Start at the very beginning and read the applicability, the topic of rulings, white papers, bulletins, etc.
Start reading government sites! Charlie Change and his opinion from his brokerage office isn't anything to read, much less believe or follow. Read issues from Cornell Law, read ALTA bulletins and white papers. Read Treasury Dept. rulings, FDIC, Comptroller of Currency, that's where you get information.
This old pathfinder has no incentive or reason to take people down the wrong path, those who complain along the trail simply don't want to be where they are. They sure don't want to hear the destination is 15 more miles ahead! There is no shortcut, if there was, I'd take it! :)
- Real Estate Investor · Amherst, VA · Member since 2015 · 386 posts · 400 votes10y
I can guarantee you that few if any private investor or small fund is out there doing forbearance and workout agreements the way you describe it. If you're saying that they have the same requirements as formal loan mods then yes, everyone is doing it wrong.
Edit: that doesn't mean people don't get financial information on the borrower. Contrary to the original post people don't simply mail in some forms and voila the note is changed.
Is it possible some investors do really stupid things that are completely illegal? It's likely. I don't think it's accurate for the majority of people on this forum who do their best to do the right thing.
- Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes10y
Originally posted by @Patrick Desjardins:
I can guarantee you that few if any private investor or small fund is out there doing forbearance and workout agreements the way you describe it. If you're saying that they have the same requirements as formal loan mods then yes, everyone is doing it wrong.
Please show where the is any different distinction between a purchase money mortgage financed by a private party, HML or and equity mortgage loan financed by equity and a mortgage funded by XYZ Bank for any purchase or refinance under the loan modification rules. You can't because there aren't any.
There are servicing exemptions for small dealers, but not on the extension of new credit.
Where do you get the idea that small note holders are special people and don't need to look at the ability of a borrower to pay a new obligation?
And, you keep saying that I'm suggesting that servicers are doing things wrong. Where does that come from? I'm pretty sure registered servicers are attempting to comply with ATR rules, you're the one claiming they aren't. You're saying they don't look at current income, employment, debt to income ratios, credit, late pays or property values? How do you know that?
How can't you guarantee anything about the functions that servicers go through, are you a formally trained loan servicer working in mortgage servicing or are you just self educating yourself in finance and assuming some flash of brilliant light put you in a position to explain and know what goes on in mortgage servicing operations? I thought you were a` Realtor who bought a few notes.
Maybe note buyers go to the Flash Bang Note School, think they are getting an education on how some broker pool works in their Am Way system, what Charlie Change does with his myths and folklore. Find me a note guru that has a past loan compliance background or regulatory finance background and I'll pay attention.
Sorry, but I don't agree with you. :)
- 10yDion DePaoliPro MemberReal Estate Broker · Northwest Indiana, IN · Member since 2011 · 2k+ posts · 2k+ votes
A little more clarity....
First, what Curt mentioned above was not correct. There is no new "closing" in a modification. Not a closing in the sense of a new origination where the borrower needs a title company/attorney and alike. There are disclosure requirements but those can typically be executed in front of a notary where mandated. To that idea we can separate the ideas of "a brand new loan" with that of "a new extension of credit".
When it comes to ATR considerations, if a loan balance increases or if a term is extended by moving the maturity date out, that typically is considered a "refinance" by the definition. Modifications which lower an interest rate and thus the payment do not trigger TILA and ATR does not apply.
Other examples beyond the increase in payment obligations and balances would include any mortgage with a maturity date that has already came to bear. Those are considered refinances as the old credit is dead.
Forbearance agreements are not subject to TILA. Provided we understand the same as above, most forbearance agreements are temporary agreements giving relief. If the terms are forbear and the obligation increases you can trigger TILA and ATR applies.
Bear in mind, that a forbearance agreement will or can create a balloon event which will require proper disclosure. Typically within the instrument. Before anyone gets lost in that, the QM rule is the one which deals with balloons and we are not discussing that here but a how the balloon finally rests in a forbearance or modification event will have affect on the QM rule.If a modification is sought on a defaulted or delinquent loan which simply lowers the rate of interest and thus the payment while leaving other loan terms in place it is not subject to the ATR rule. To me, this sort of makes sense (yea for the regulators!), the event is trying to give relief to the borrower. We can presume that for the most part mortgagees simply do not lower rates of interest for the heck of it. To that regard, a borrower in need of relief is by definition struggling with his/her ability to repay. So those events are exempt from TILA so long as they do not affect the above.
Another honorable mention that would come under ATR would be discharged BK loans. If the debt is discharged by the BK and the borrower wants to keep the house you are in fact extending new credit. We will probably see a waive of those improper executions in the next couple years.
I will say, that in my experience most agreements used are "Trial Modifications" where a modification is merged with a forbearance into one agreement. They are less of a forbearance agreement and more of a modification agreement as the end result is typically a formal change in the note terms. A "Modification" is by definition a formal change in the terms of the note.
In my line of sight in the market place, I do see modifications take place where the borrower didn't have ability to repay. They are usually not events which trigger ATR considerations as the Mortgagee simply reduces the rate of interest - often times somewhat arbitrarily.
What will sting that mortgagee and servicer is not so much the ATR as the mandatory loss mitigation rules that need to be in place for each licensed participant. So just because we don't have an ATR consideration doesn't mean we don't have a Dodd Frank consideration. A hardship package has to be sent and specific steps according to the loss mitigation procedures are supposed to be followed. If not, the Servicer violates the servicing rules in DF. That includes collecting from the borrower income and asset documents to determine the hardship.
I think the newbies often miss or are not told of the tax implications on to the borrower. Failure to disclose the tax burden can result in penalty.
There is sense in the newer loan investor segment that the answer to all loans is a modification. That is a fairly dangerous and misleading idea. I have seen it lead to stalled disposition if not a complete freeze of taking action on a loan. They are not hot cakes and shouldn't be passed out to any passer-by. - Real Estate Investor · Amherst, VA · Member since 2015 · 386 posts · 400 votes10y
Originally posted by @Bill Gulley:
Originally posted by @Patrick Desjardins:
I can guarantee you that few if any private investor or small fund is out there doing forbearance and workout agreements the way you describe it. If you're saying that they have the same requirements as formal loan mods then yes, everyone is doing it wrong.
There are servicing exemptions for small dealers, but not on the extension of new credit.
Where do you get the idea that small note holders are special people and don't need to look at the ability of a borrower to pay a new obligation?
And, you keep saying that I'm suggesting that servicers are doing things wrong. Where does that come from? I'm pretty sure registered servicers are attempting to comply with ATR rules, you're the one claiming they aren't. You're saying they don't look at current income, employment, debt to income ratios, credit, late pays or property values? How do you know that?
I sincerely hope you're joking. I'll let you have the last word, but just know that no servicer out there does closings for workout agreements. For Dion to agree with me on something, which we never do, is pretty revealing.
- Investor, Entrepreneur, Educator · Springfield, MO · Member since 2009 · 21k+ posts · 12k+ votes10y
Nope, no joke.
Well, I think getting @Dion DePaoli's opinion is pretty simple.
Where did I say there was loan closing for a modification, there should be a memorandum or allonge, but it is not a loan closing as you think, depends on the jurisdiction and loan. We don't go to a title company all over again, but we can check for liens and encumbrances again.
"Closing" a modification of a mortgage is simply the execution of the modification agreement, if title coverage is effected it may be renewed, insurance may be put in place again, taxes may be brought current, loan balances may be adjusted along with interest rates.
The lingo of Realtors and bankers and other lenders and servicers is not always uniform, a real estate closing is one thing, a loan closing is another thing.
This is also getting off the topic of the ATR rules being applied.
:)
- Real Estate Investor · Amherst, VA · Member since 2015 · 386 posts · 400 votes10y
Originally posted by @Curt Smith:
In BP threads thanks to Bill and other true experts, what's left out is that that work out is now a brand new mortgage that needs FULL Dodd Frank process; full doc, some DTI that you choose, an LMLO and a closing at an attorneys office. Few of these potential re-performing candidate borrowers will make it through full doc and DTI I suspect.
Considering this is what sparked the debate and you were vehemently defending it..
You accuse me of not reading properly. Have you even read what we were arguing about? Are you retracting that you need full doc, DTI, an LMLO and a closing at an attorney's office to have a valid workout agreement, or do you still say it's needed?
You can mock and ridicule me as much as you want - that's not how they're being done right now by servicers and attorneys.
- Rental Property Investor · Clarkston, GA · Member since 2012 · 2k+ posts · 1k+ votes10y
@Patrick Desjardins I offered I was a poor messager, mainly meaning I didn't have statute URLs just reading of others and I did hit the hornets nest square on I admit!!!. Dion helped with the various shades of grey!!!
I appreciate Dion's coverage of the topic which helped me and I retract my blanket statement. But what I hear in Dion saying re the modification process hooking in ATR (etc) or not if: the loan amount is not changed, or term date is not changed, then no ATR. But if term or balance is changed then ATR. Time will tell if Bill's assertions come to pass. We need case law and CFPB clarification. Maybe this 12 month wait period is the regulator's blunt instrument re this grey area?
What Dion also added some light on is that buying NPNs and attempting get them to re-performing is alot more complicated than most novices believe. This sub-text I believe is still in tact.
The suggestion to get your Attorney to sign off on XYZ is a bit simplistic especially re Dodd Frank, CFPB et al. Get 10 Attorneys in a room you'll get 3 answers, 7 will beg off, and the 3 will not represent you pro-bono in court should the answer they give you was wrong (which is always the case re Attorney advice). I have low opinion of Attorney's advice on complicated maters.
Lots of folks aren't following alot of regs (in general) is what we might guess here, no big revelation if big shops and small frys aren't doing ATR etc on modifications. Business as usual for a few more years until some case law and more CFPB clarifications.
I don't view this as an argument. How could we argue over something so insanely complicated and where big shops and guru's are possibly ignoring some finer points?? I find this educational.
Thanks everyone.
- Specialist · Dallas, TX · Member since 2014 · 900 posts · 392 votes10y
This is a good thread! @ Rich Harmon, I went to actually check out that link, and we see its a protest by the lying fauxahontas Elizabeth Warren, who milked the Indian background to get preferential treatment, despite not being a citizen of the Cherokee Nation, or enrolled in the Eastern Band, or is not one of the United Keetoowah Bands of Cherokee.
She is the worst of the worst, and to urge Fanny, Freddie, and HUD to stop selling these heavily defaulted loans to investors who are quick to foreclose, who will actually make some effort to get the people repaying, besides sending out over 140 letters, as is the case with a loan I am looking at buying now, is such a crock.
To date, when we buy a defaulted note, we make so many efforts to contact the borrower and give them a chance to start repaying; door knocker, phone calls, letters, and they refuse to reply, then they are going get foreclosed on. It's just that simple. They have not paid a penny on their homes in 2-6 years and its saved them thousands of dollars, all the while wracking up interest & penalties that they owe.
If they would just make some effort to contact us, we can work with them to lower payments, lower adjustable rate loans that spiked, drop some interest, penalties, and principal if they are deeply under water. And in a way, Dion's statement above about that being pie in the sky to want to help them, in reality, the majority don't want the help, have been conditioned by the originating bank to NOT do anything besides send out endless form letters, and the borrowers take advantage of it.
Logan brings up a good analogy they are like cars. Though if you miss 1 payment, you will be repossessed within 30 days, its harder to reposess a house. So we actually learned to send out our 30 day breach letter 2 weeks after the "hello" letter and let foreclosure run parallel to trying to work it out with them. What typically wakes the the ^%$# up, as Samuel L. Jackson so eloquently put it, is the letter from an attorney that the property is being foreclosed on.
Out of the 20 notes, CFD's, or REOs we bought last year, 6 were occupied. Out of that, two replied and expressed interest in keeping their homes. Then those two went dark and they are going to loose their house, its just that simple. Seems like all we are doing is foreclosing to get title. As investors, we can't afford to wait years for any results, when they are so use to telling the banks to stick it where the sun don't shine.
if they are so concerned with the best possible outcome for the borrower is to have them wake up to reality, if they can't make regular payments on the home, they should not even own a home. This goes all the way back to Obama and the other race hustlers who forced banks to make loans to people who could not qualify for a loan. Now that those chickens have come home to roost, they are going to do it all over again with 3% down loans. If they refuse to be helped, or return a call or reply to a letter, then what's the point? They are rejecting the help, and we won't wait a year.
Sadly, the majority of the payments are well below the average rentals in the area, if its not adjustable. What is sad is the banks refused to help them when they had a chance, instead of sending endless form letters that are automatically deposited in the circular file...
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