Wednesday, December 16, 2009

Obama HAM program failure

In a report out last week, the number of final modifications completed by the major banks under the main Obama HAM program are ridiculous. Some 31,382 homeowners have entered into final modifications through the end of November under that specific program. That is out of millions of eligible homeowners, of which 759,000 have entered into trial plans. Here is a breakdown:

According to the report, through the end of November, J.P. Morgan Chase & Co. /quotes/comstock/13*!jpm/quotes/nls/jpm (JPM 41.32, +0.46, +1.13%) has 143,027 three-month trial modifications started under the program. It has made 4,302 modifications permanent. Wells Fargo Bank /quotes/comstock/13*!wfc/quotes/nls/wfc (WFC 25.81, +0.15, +0.57%) has 104,808 trial modifications started and 3,537 permanent modifications using the program.

But Bank of America Corp. /quotes/comstock/13*!bac/quotes/nls/bac (BAC 15.31, +0.12, +0.79%) has started 158,462 three month trial modifications with the program and has made just 98 permanent. Citigroup Inc. /quotes/comstock/13*!c/quotes/nls/c (C 3.47, -0.09, -2.53%) has started 103,478 three-month modifications under the plan. Of those only 271 have become permanent.

There are other programs that have resulted in modification for homeowners, but clearly the banks are more willing to foreclose on properties than modify loans. Most major banks have announced in the last week their intent or completion of paying back their TARP bailout money. They obviously want to be out from under public scrutiny and restrictions on payment of excessive salaries and bonuses.

The president met with 10 major bank CEO's this week to push several issues, including speeding up modifications, but we will see if it actually makes any difference.

Chris Barsness, Esq.

Monday, December 14, 2009

Loan Modifications Slow - Bankruptcy Better Option to Save Your Home

The Obama administration released figures at the end of last week indicating that only 32,000 homeowners have entered into final loan modifications under the HAM program this year. That is out of the several million homeowners that are likely eligible. These results show that lenders are slow or unwilling to finalize modifications to save homeowners. Lenders are putting homeowners in 3 month trial plans that are lasting 6 months and not leading to final modifications.

A Chapter 13 bankruptcy can result in elimination of 2nd mortgages and other debts and allowing homeowners to keep their homes. A Chapter 7 can still allow homeowners to keep their homes as well through reaffirmation agreements. The additional bonus is that the bankruptcy puts a stop on foreclosure or eviction proceedings, resulting in additional time for the banks to get their acts together and start finalizing modifications. Homeowners without this protection are relying on lenders telling them they will hold off on selling the home, but that is not a legally binding agreement. I get new clients who tell me their lender said they were working with them and not to worry, only to get an eviction notice stating their home has already been sold.

Now is the time to take action. Do not rely on a customer service rep telling you not to worry, they won't sell your house, because they will. You will never hear from that person again and they are not about to help you find a new place to live.

For a free consultation with an actual attorney and not a paralegal or assistant, call us today. 888-881-6591.

Wednesday, December 9, 2009

Obama HAM program still not effective

The following was reported by the Associated Press and reveals the lack of progress from the banks. The home is not safe until the permanent modification takes place, so there is significant risk of a trustee sale until that happens. A short sale or bankruptcy filing are alternatives to the long and unknown modification time frames and stressful postponement of trustee sales pending modification review.

Only about 10,000 homeowners have received permanent loan modifications under the Obama administration's mortgage relief plan, evidence of continuing woes for the government's effort to stem the foreclosure crisis.

That means fewer than 2 percent of the 650,000 homeowners enrolled in the program as of October had their mortgage payments permanently lowered to more affordable levels. The results spotlight the limited success lenders are having in getting borrowers through the trial period, according to an oversight panel report released Wednesday.

The Treasury Department is expected to release updated numbers through November on Thursday.

Loan Mod Delays - Trial Plans

Many homeowners have been put into what the banks call trial plans or forbearance plans. They are usually setup as a 3 month trial plan under the HAMP program; however, most homeowners end up being told to keep paying months after the initial 3 months. Remember that banks are under no obligation to provide final loan modifications. They may be doing certain unfair business practices, fraud, or other misdeeds in their interactions with you, but without taking them to court, homeowners will have no real way to put any pressure on the lender or servicing company.

Often times a bankruptcy filing is also another way to save the home and put pressure on the lender to work something out; however, the legislation that would have given judges the power to force modifications was defeated this last summer, so they don't have cram down powers at this point.

Our office can review your situation to determine if you have enough evidence to support filing a lawsuit against the lender or servicing company or if a bankruptcy filing would benefit you and help save your home.

Contact us to have a consultation with a licensed attorney.

Thursday, November 19, 2009

California Homeowners - Beware Loan Mod Advance Fees

No matter how a company or lawyer tries to justify some up front fee to help with a loan modification, whether they call it a progress payment, or break up their "services" into sections, it still is going to get them into legal hot water.

The law is very clear and was intended to make sure homeowners do not pay anything until the service has been performed. Many people charge a large fee to do a forensic loan audit or compile documents and review possible qualification for modification programs. They then claim they will do the loan modification for free or low cost (to avoid being guilty of Civil Code Section 2944.7, subjecting them to up to 6 months in jail).

Do not pay large fees for a loan audit or other alleged services or education about modification/foreclosure. The claims that they have some special knowledge or that they will find legal violations that will make the lender roll over and give you what you want are completely false!

The process is not that complicated and there are free services through HUD and others that can help guide a homeowner through the process. Our firm put together a do it yourself guide for $99 that can help homeowners try to save their home through a modification without huge fees.

There are times when certain laws are violated or homeowners have legal rights and claims against lenders and servicing companies; however, this requires a licensed attorney to review and without an actual lawsuit pending, most lenders will pay no attention to claiming they violated TILA, RESPA, or any other laws.

For more information on our do it yourself loan modification 101 guide, visit our website.

Bankruptcy Or Short Sale Better Options Than Modifications

It seems that banks are continuing to be extremely slow and difficult to deal with on modifications, even though the HAMP guidelines were published almost 9 months ago. I see many clients come in that may have tried a modification on their own or through a company, only to obtain no real relief. Many banks will give a denial, but then tell the homeowner to resubmit the exact same paperwork to be re-reviewed. This is only going to result in yet another denial unless something has changed in terms of financial ratios and the homeowner is kept is more months of frustration and delays.

The problem, as discussed in my do it yourself guide, is that homeowners often do not give the banks what they want to see. The other problem is that many homeowners are in over their heads and the terms a bank might give them will still not help, even if they can actually get approved.

In many cases, homeowners can keep their home through a Chapter 7 or 13 bankruptcy filing. This also helps the homeowner reduce other debts at the same time. The homeowner can still keep certain property and vehicles, so unless the homeowner was planning on buying a major item in the next 2 years, a bankruptcy filing can be the most effective way to get a fresh start.

A short sale (where the bank allows you to sell your home for less than what is owed) is also a good alternative. The banks will take tremendous losses in the process and the homeowner is no longer liable for a huge mortgage. It will take a few years to get bank into a position to purchase, but with the large number of vacant properties available for rent at a reasonable price, it shouldn't be that much of a concern.

For more information, contact us at
Chris Barsness

Friday, October 23, 2009

Wrongful Foreclosure Class Action Lawsuits

Our firm is currently examining potential claims for certain unfair business practices involved when home lenders or servicing companies foreclose and sell a house while they were telling the homeowners they were going to work with them to save their homes.

Countrywide already settled with the California Attorney General for almost $30 million for some of its lending practices and wrongful foreclosures. Unless the homeowner takes the settlement money offered to them and signs the release of claims, they can still pursue their own independent lawsuit. Most homeowners do not have the funds to spend thousands of dollars and the next year of their time suing a lender.

Our firm is in the process of analyzing claims in a class action lawsuit against some of the major lenders for their wrongful business practices. If the cases are strong enough, we will be taking these cases on a contingency basis, which means at no initial cost to the homeowner. We only get paid based upon a percentage of whatever we either win at trial or obtain in a settlement.

Shortly, we will be announcing an online portal where homeowners can submit their story to see if they may be eligible to be included in the class action lawsuit.

Chris Barsness, Esq.

Monday, October 12, 2009

New California Loan Modification Law

The governor took action over the weekend on two pending bills regarding loan modification. AB 764 was a tough measure with various restrictions, but it was vetoed. SB 94 was signed into law October 11th and is effective immediately as urgency legislation.

SB 94 essentially prohibits anyone (including an attorney or real estate agent) from collecting any fees to perform a loan modification or forbearance until the service has been completed. It also prohibits obtaining any security to assure payment and obtaining a power of attorney. Even if the person assisting you with a loan modification is willing to wait to get paid until the service is done, without a power of attorney, the homeowner will have to do all the work with the lender themselves. Attorneys often take deposits called retainers up front, but do not bill the client until the work is performed. This assures that the bills will get paid; however, the broad language in this bill implies that attorneys cannot collect a retainer to secure payment.

AB 764 was much tougher and required payment be collected only after the modification was successful, so even if the work was done, if it didn't go through, one couldn't collect.

Without a power of attorney or deposit to assure payment, our firm will no longer be taking new cases for loan modifications. We will provide related legal services for foreclosure relief, bankruptcy, wrongful foreclosure, and can provide a consultation to help homeowners pursue a modification on their own. This consultation comes with a copy of our self-written how to guide for performing your own modification.

Unfortunately, the law intended to protect consumers went too far in making it nearly impossible for a homeowner to get even legal assistance in the process.

Chris Barsness, Esq.

Thursday, October 8, 2009

Were you scammed into a loan modification?

A large number of homeowners that have either tried on their own or hired companies or attorneys to try to get their home mortgage loan modified have been or will be rejected due to the amount of other debt they have. Some of these companies or law firms may have let greed cloud the judgment of what is in the homeowner's best interest.

If the homeowner has a large amount of credit card or other debt, many lenders will reject them for this reason. These are essentially being looked at like a refinance, if you don't have regular income or have large other bills, they will not approve you. They don't really care that it is your home or that you want to keep it, it is a matter of probability that you can make the payment if they work with you.

This is not to say that you should not try to get a modification, but realize that the number of actual modifications or trial plans in existence reported to the government is very low, so lenders are not just giving them away as some would make you believe.

In many cases, these homeowners would have been better off pursuing a bankruptcy from the beginning. It is still possible to save your home in a bankruptcy and due to the current economic climate, bankruptcy is not as much of a stigma as it has been in the past.

I have been approached by numerous potential clients after they paid and hired a law firm to try to modify their loan. Looking at their financial circumstances, it is clear from the start that they were never going to be qualified for a modification. In these cases, there are other options that should be considered, including a short sale, deed in lieu of foreclosure, or bankruptcy, that may be a better option and in the best interest of the client. Unfortunately, many of these companies or law firms may have simply been motivated by greed, not what is in the best interest of the client. In fact, the majority of people I speak with who hired a law firm never even talked to an attorney, ever!

All of our cases have always been reviewed by an attorney to determine what is in the best interest of the client. In some cases, even people who might qualify for a modification are still denied by the lenders. A homeowner needs to assess all possible options and not assume that a lender is on their side to keep them in their home.

A bankruptcy can be a fresh start to help people get back on their feet and, although every case can vary, it is possible to keep your home in a bankruptcy.

Although some of these companies may have shut down and disappeared with your money, it may be worth investigating to see if they really provided the service you paid them for, in which case you may be able to sue to get your money back or for other damages.

Chris Barsness, Esq.

Thursday, October 1, 2009

Loan Modification Do It Yourself Book Now $99

In an effort to help homeowners in financial crisis, we have decided to discount our e-book on foreclosure relief and how to do your own loan modification to just $99.

It is written by a real estate attorney who has been doing loan modifications in California throughout the foreclosure crisis, but can apply to any homeowner throughout the United States.

This book was written to provide homeowners with some basic concepts surrounding mortgages, foreclosure, loan modification, and alternatives to foreclosure. It provides the tools necessary for homeowners to do their own loan modification. Despite some companies proclaiming they have a 99% success rate in loan modifications or saving your home, I can tell you that from my experience, there is no secret sauce that guarantees any specific result. You simply need to have the right information to provide to the lender to in the way they want to see it.

Here in California, many of the companies, law firm, or real estate licensees that were making all kinds of promises or guarantees of success are now out of business with some being investigated by the Federal Trade Commission, the State Bar, Attorney General, and FBI. With the passage of recent legislation in California, it has made it virtually impossible for our firm to assist homeowners in the process of loan modifications; therefore, I have written this guide to give you some insight into how the process works and how you can do it yourself.

Our firm will continue handling real estate and bankruptcy matters and also offer a consultation with a real estate attorney to go over your legal options, review your financial situation, and to come up with a strategy to accomplish the best foreclosure relief option. It includes a copy of the do it yourself kit and is for a flat fee of $500.

To order, you can order from

Saturday, September 26, 2009

Loan Modification Lawyer's Do It Yourself Kit

We are proud to announce the first publication of our loan modification do it yourself kit. It is a e-book available in MS Word or Adobe Acrobat (pdf) format. The price for this book is $199 and is available for homeowners in any state. It is written by a real estate attorney who has been doing loan modifications in California throughout the foreclosure crisis.

This book was written to provide homeowners with some basic concepts surrounding mortgages, foreclosure, loan modification, and alternatives to foreclosure. It provides the tools necessary for homeowners to do their own loan modification. Despite some companies proclaiming they have a 99% success rate in loan modifications or saving your home, I can tell you that from my experience, there is no secret sauce that guarantees any specific result. You simply need to have the right information to provide to the lender to in the way they want to see it.

Here in California, many of the companies, law firm, or real estate licensees that were making all kinds of promises or guarantees of success are now out of business with some being investigated by the Federal Trade Commission, the State Bar, Attorney General, and FBI. With the passage of recent legislation in California, it has made it virtually impossible for our firm to assist homeowners in the process of loan modifications; therefore, I have written this guide to give you some insight into how the process works and how you can do it yourself.

Our firm will continue handling real estate and bankruptcy matters and also offer a consultation with a real estate attorney to go over your legal options, review your financial situation, and to come up with a strategy to accomplish the best foreclosure relief option. It includes a copy of the do it yourself kit and is for a flat fee of $500.

To order, you can order from

Monday, September 14, 2009

Loan Modification Money Back Guarantee, What If They Can't Pay You Back?

Many potential clients ask whether our firm guarantees certain results or gives a money back guarantee if a loan modification doesn't go through. We do not because we know that we provide the best legal representation we can to find and aggressively pursue the best legal option for our clients. Not everyone can get a loan modification and an attorney cannot force the lender to approve someone.

I was quite shocked to hear that a law firm in San Diego that offered a money back guarantee sent its clients a notice that they are now insolvent. The Alliance Law Center in San Diego sent letters to existing clients and posted the letter on their website:

So now people who paid thousands of dollars with a "money back guarantee" are being told that there is no money to even work on their case, much less give a refund. Never mind the contractual issues of their obligation to give the refund, what about their ethical duty as a licensed California attorney. Those fees were not earned and you cannot just close up shop and tell people to arrange to get their file back or hire another attorney.

Anyone who has been in this situation should contact the State Bar of California.

Chris Barsness, Esq.

Tuesday, July 21, 2009

Foreclosure Legal Pitfalls

One of the biggest advantages to hiring an attorney to assist a homeowner with foreclosure relief or loan modification is the fact that there are numerous issues people are unaware of that, if not handled properly, could result in making their situation worse.

Remember that your lender is often taking computer notes and usually records calls. Although there are issues regarding the legality of recording phone calls in California and its potential as evidence in a case, it is still something that could come back to haunt homeowners.

Here is just one example: Let's say you purchased your house 3 years ago and told your loan officer or broker that you made a certain amount per month. The broker may have done what is called "stated income" which does not require proof of income, such as paystubs. Some borrowers may have heard or even been told by their broker that they can exaggerate or increase how much they make because it is not verified by the bank, thus allowing them to qualify for a more expensive house. Whether you intentionally increased ("fudged") your income or your broker may have done it for you, if you later tell your lender how much you were really making at the time or accidentally tell them you may have gone a little too high on what you actually make, you may have just given the lender the leverage it needs against you. "I shouldn't have even qualified for the loan because I didn't really make that much." You were likely in a non-recourse loan in California, which means you have no personally liability. The only thing the lender can do is to take back the home, they can't sue you for any missed payments, decrease in value of the home below what you owe, etc. Now suddenly the lender can sue you for fraud in connection with the original loan. Without realizing it, you opened yourself up for personal liability.

This is only one of a number of small legal issues that many homeowners don't understand. Lawyers serve as an intermediary to take the emotion out of the issues and understand the potential legal issues out there.

I am often asked by potential clients what exactly I do for homeowner that they couldn't do for themselves. Many people think it is just a matter of calling the lender and faxing over some bank statements and tax returns. Yes, that is part of the process, but remember that the banks spend millions of dollars per year on law firms and lawyers. They have an army of lawyers working for them to be sure they protect their financial assets. Homeowners should understand that banks see numbers not people and they will use any potential legal edge possible to be sure to maximize their profits.

Sunday, July 19, 2009

CA Foreclosure Activity Remains High Despite Moratorium Efforts

The number of new notices of default recorded in California rose to approximately 46,000 in the month of June up from 42,000 in the month of May. That number is up from approximately 10,000 2 years earlier. It is too early to see what effect the California foreclosure moratorium law will have in California, but due to the numerous loopholes in the law, it is unlikely that it will have any effect.

Although lenders have ramped up efforts and staff to implement loan modifications, they are still moving the foreclosure process forward even while reviewing a borrower for a potential modification. Borrowers must move quickly to pursue all legal options because the lenders will move forward with scheduling the sale of their home despite their claims that they will work with them.

It is likely that the number of notices of default and notices of sale will continue at their existing levels for the rest of this year.

Wednesday, July 1, 2009

Owners of Rental and Investment Properties Must Act To Protect Themselves

There are thousands of owners of rental and investment properties that are facing decrease in rental income or other financial hardships. Although they want to save the property, it may not feel like it is as pressing of an issue as their own home where they live. However, if you have tenants, this raises another potential issue for liability. If the lender forecloses on the property, they may do a trustee sale in which they will not be able to go after the owner for personal liability for any unpaid payments or a difference between the sale price and what was owed. This does not mean that the owner is free to just let the property go. Obviously there are potentially harmful credit impacts, but also the existing tenants have rights. More than likely, they have a written lease agreement with the owner. If they are suddenly served with a notice to move out or be evicted by the new owner after foreclosure, they may decide to bring a lawsuit against the former owner for damages. In fact, if they find that the former owner knew about a pending foreclosure when entering into the lease, they could have a claim for fraud, which will not go away even in bankruptcy.

Even though it is not where you live, owners of rental and income properties must still work to resolve any potential foreclosure of those properties. The federal programs do not include investment or rental properties, but many lenders will still work with you to try to reduce your payment and keep the rental. They will not do this if you don't aggressively pursue any potential option they may have.

Call us today to evaluate your situation.
Law Office of Barsness & Cohen

Tuesday, June 2, 2009

Mortgage Rates Jump

Some of you may have notices that mortgage rates have jumped substantially in the last few weeks. A 30 year fixed rates averages over 5.25% when it was below 5% only a few weeks ago.

So how does this affect the loan modification process? Your lenders are watching rates as well. A modification is similar to a refinance, so the prevailing interest rates can affect what the lender is willing to do. Although the Obama Making Homes Affordable Plan discusses looking to getting homeowners into a payment that is 38% or 31% of their gross monthly income through interest rate reductions, extension from 30 to 40 years to pay, or even principal reduction, lenders also worry about fixing a rate too low.

It would appear that this recent increase in rates may only be temporary, but it is hard to tell. The 30 year fixed rate trends closely to the yield on the 10 year US treasury bond which went up significantly over the last few weeks. Some speculate that this is due to the increased demand for bonds; however, the yield goes up when the price goes down. Normally higher demand would tend to increase the price, and thus, the yield would go down. This increase in yield may simply be a correction to what its market value should have been or show an indication that the economy is actually growing and in recovery.

We will simply have to wait and see.

Thursday, May 21, 2009

Lenders Pay Cash For You To Leave Your Home

Many homeowners are unaware of the options that they may have when they are delinquent on their home loan. They hear about loan modifications and think that this will automatically save their home and is the only option they have. Many homeowners simply let the bank foreclose and simply walk away from their home. You should always know all your rights before making any decisions!!

Depending upon where you are at in the foreclosure stage, your lender may have a financial interest in you leaving your home quietly and quickly. Often lenders who see homeowners that are over 9 months delinquent or who have tried to do a loan modification and failed decide that they are simply going to move forward with foreclosure. They take into account many factors, but keeping a good person in their home they have lived in for 30 years is not one of them. It all comes down to the profit and loss, the almighty dollar!

Even in non-judicial foreclosure, which, here in California is a trustee sale of property, the bank has to incur substantial costs and time delays to foreclose. The lender looks at the costs and is often willing to pay cash to get a deed in lieu of foreclosure. This simply means that you agree to turn over the home to the bank and walk away at a certain time. This saves the lender the costs of paying the trustee to send notices, schedule the sale, attend the sale, transfer a trust deed, and then go to court to evict the homeowner. Even if your lender has taken title at a trustee sale and are entitled to immediate possession, they cannot simply go in and change the locks to force you out. If you occupy and are still in possession of the house, they have to serve you with a notice to quit and then go to court to get a court order to get you out. The lenders will often pay what is called "cash for keys" to avoid hiring attorneys and going to court to force you out.

Often the right negotiations and key pieces of leverage can get homeowners thousands of dollars from the lender that can help them start a new life.

We handle these types of cases and can assist you in obtaining the best possible remedy for your situation.

The information contained above is informational only and only discussed California law, you should consult an attorney in your state to evaluate all your legal options.

Chris Barsness, Esq.

Tuesday, May 19, 2009

Congress approves Helping Families Save Their Homes Act of 2009

May 19, 2009- Congress passed the Helping Families Save Their Homes Act of 2009 sending the legislation to President Obama for signature. This program expands the previously announced Obama Making Homes Affordable and Homeowner Affordability and Stability plans. Although the provisions that would give bankruptcy judges the power to cram down mortgage in bankruptcy proceedings was absent, the legislation adds more incentives to lenders to keep people in their homes with reasonable payments through mortgage modifications.

The act expands the number of homeowners who will be eligible for loan modifications. These programs can extend mortgages to 40 years, reduce interest rates, and reduce the principal on both first and second mortgages for a person's primary house. If a home that has a modified loan under this program is sold within the first 5 years after the modification, the mortgage holder (lender) gets anywhere from 10 to 90 percent of any equity accumulation from the net sales proceeds.

Since the plan gives the loan servicer (who is usually the only person you can negotiate with when it comes to your loan) a safe harbor when entering into certain loan modifications, workouts, or other loss mitigation plans, this should help push servicing companies to worry less about liability in modifying loans and more about helping homeowners.

The legislation also extends the increased Federal Deposit Insurance Act (FDIC) coverage limit from $100,000 to $250,000 from the end of 2010 to the end of 2015.

Chris Barsness, Esq.
Law Office of Barsness and Cohen

Thursday, May 14, 2009

Obama modification plan working

The administration announced today that 55,000 loans were modified so far under Obama's making homes affordable plan. Although it took weeks and even months for the servicing companies to implement the programs that were expanded to apply to second mortgages, the lenders now are beginning to approve and process the applications.

In addition, the administration wants to expand the program to help those who are not approved for a modification to obtain assistance with a short sale or deed in lieu of foreclosure by giving lenders incentives to work on these alternatives to foreclosure.

"If a modification is not possible, we are also announcing steps to encourage the quick private sale or voluntary transfer of property, which will save homeowners money and protect their financial future," said Treasury Secretary Geithner. "These are critical steps in stemming the foreclosure crisis and stabilizing the housing market, both of which are critical to our economic recovery."

This is a very positive sign that although the number of foreclosures is rising, there is help out there for homeowners.

For more information, visit us at
Law Office of Barsness and Cohen

Friday, May 1, 2009

Obama Bankruptcy Mortgage Cram Down Fails

April 30, 2009- The second step in assisting homeowners who are in jeopardy of losing their homes in foreclosure was defeated today in the U.S. Senate. The proposed law would have given bankruptcy judges the power to force lenders to modify mortgages on the debtor's home. The so-called "cram down" powers would be useful in adding leverage on the big banks to work with homeowners to avoid a judge ordering a modification. As it is now, the borrower can attempt to re-affirm their debt with the lender to keep their home during the bankruptcy process. They will still be able to attempt this; however, the banks will likely not be as willing to make any kind of changes or modifications to the actual terms. They will likely ask the borrower simply to reaffirm the debt on the same terms they originally had, but adding the unpaid or late payments to the principal.

If you have any questions about bankruptcy, loan modifications, or foreclosure relief, you can call for a free consultation.

Chris Barsness, Esq.
Law Office of Barsness & Cohen, Beverly Hills, California