Author Archive: Ted Greene

Mortgage Resets Are Beginning, and Things Could Get Ugly

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The Home Affordable Modification Program was a godsend to many troubled homeowners after the financial crisis, allowing tens of thousands of mortgage holders to reduce their monthly payments to no more than 31% of their gross monthly income, often through interest rate reductions.

But, all good things must end, and HAMP – which helped many avoid foreclosure – was only a five-year, temporary fix. Now, modifications that began in February 2009 are maturing out of the program, and into a gradual increase in interest rates. For most, this means a final monthly payment increase of $196; for some, it could be as high as $1,724, depending upon where the average rate for a 30-year loan sat at the time of the modification.

Almost 90% of HAMP loans will see increases
According to the latest report from the Special Inspector General for the Troubled Asset Relief Program, 88% of the nearly 900,000 active HAMP loans will see their payments rise between now and 2021. With many borrowers having their rate reduced to as little as 2%, a 1% per year rise will likely be painful. Some will see their rates reset up to 5.4% over the next few years — more painful still.

Obviously, the redefault risk is pretty high. As SIGTARP notes, those in the HAMP program the longest default at the highest rate – nearly 50%. Almost half of homeowners with HAMP modifications received them from 2009 to 2010. The overall default rate at the end of last year was 28%.

Which institutions hold these loans? Of the 10 major servicers involved with HAMP, Bank of America Corp. (NYSE: BAC  ) , JPMorgan Chase & Co. (NYSE: JPM  ) and Wells Fargo (NYSE: WFC  ) are in the top five. At the end of 2013, redefaults for each bank associated with HAMP loans was 31% for B of A, 23% for JPMorgan, and 24% for Wells.Ocwen Loan Servicing and Nationstar Mortgage, the other two servicers in the top five, each had redefault rates of 30% and 26%, respectively. Can they expect a whole lot more in the next few years? It certainly seems like it.

The other reset problem: Helocs
In addition to new default risks for HAMP loans, banks are also facing issues with home equity lines of credit made right before the crash, some of which began maturing last year. Once the loan turns 10 years old, these so-called Helocs begin to add principal to the interest-only payments homeowners have been accustomed to paying. For some, those reset payments will be in the neighborhood of $500 to $600 more each month.

The usual suspects mentioned above are the biggest players here, as well. Together, Bank of America, JPMorgan Chase, and Wells Fargo hold big hunks of the total $529 billion in Helocs, with B of A having the biggest portion, $81.4 billion. JPMorgan and Wells hold about $70 billion and $80 billion apiece. Since these loans are usually second liens, banks face bigger losses.

Banks are facing these threats with less of a cushion these days, as well. As their troubled loan portfolios have waned, banks have cut back by billions of dollars on their loan loss reserves. Both Bank of America and Wells, for instance, put aside approximately $5 billion less in 2013 than they did in 2012.

Things could get rough for the big banks again very soon, as defaults start to add up. As far as they’ve come from the dark days of the financial crisis, the legacy of banking’s pre-crisis lending spree never really seems to fade

source:  http://www.fool.com/investing/general/2014/04/05/mortgage-resets-are-beginning-and-things-could-get.aspx

Duped Homeowners At Risk Of Losing Home Due To Adjusting Payments.

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In the years leading up to the recent mortgage crisis, the behavior and activities of mortgage lenders changed dramatically. Lenders offered more and more loans to higher-risk borrowers, including undocumented immigrants. Sub-prime mortgages amounted to thirty-five billion dollars ($35,000,000,000) (5% of total originations) in 1994 and increased dramatically to six-hundred billion dollars ($600,000,000,000) (20%) in 2006.

In addition to considering higher-risk borrowers, lenders offered increasingly risky loan options and borrowing incentives, such as “yield spread premiums.” The American Dream of home-ownership could not have been easier to obtain. However, with an ever-growing “cash-cow” providing limitless income to mortgage brokers and lenders, greed inevitably took over.

Mortgage qualification guidelines began to drastically morph. At first, the “stated income, verified assets” loans were introduced. Proof of income was no longer needed, borrowers just needed to “state” income and show that they had money in the bank (which in many circumstances, the brokers would transfer their own or company funds into the borrowers account to ensure approval). Then, the “no income, verified assets” loans were introduced. The lender no longer required proof of employment. Borrowers just needed to show proof of money in their bank accounts. The qualification guidelines kept getting looser in order to produce more mortgages and more securities. This led to the creation of “No Income, No Assets” (“NINA”) loans. Basically, NINA loans are official loan products and let you borrow money without having to prove or even state any owned assets. All that was required for a mortgage was a credit score. This program solely based the funding on the value of the collateral (the home), which often led to over-inflated appraisals to ensure approval.

Due to the risky nature of these types of loans, they frequently held extremely predatory features that were in no way of any benefit to the borrower. One example of a predatory mortgage sold during this time was the interest-only adjustable-rate mortgage (ARM), which allows the homeowner to pay just the interest (not principal) during an initial period. Nearly one (1) in ten (10) mortgage borrowers in 2005 and 2006 were sold these “option ARM” loans, unbeknownst to some, including Plaintiffs.

As a result of the enormous amounts of profit made on sub-prime mortgages, lenders began paying extreme commissions and “kickbacks” outside of closing to ensure that mortgage brokers sold borrowers the most profitable option.

These incentives led to the financial interest of the borrower being thrown to the wind as the commissions and bonuses paid to mortgage brokers were substantially larger when they would place a “prime” borrower into a “sub-prime” mortgage. Mortgage brokers, who owe a common law and statutory fiduciary duty to borrowers, would fail to mention that; 1) the loan is considered “sub-prime,” and 2) the borrower could qualify for a traditional “prime” mortgages holding a fixed interest rate and payment that would fully amortize.

This lending scheme, coupled with the ever falling home values due to inflated appraisals, is the reason for the State of California’s economy being crippled as it resulted in the millions of foreclosures of these “designed-to-fail” mortgages. Borrowers are being faced with adjusted payments that are substantially larger than the original payment amount resulting in default.

If you’ve experienced first-hand the hardship of these adjusting payments and want to learn more about your remedies visit  the wrongful foreclosure attorney Ted A. Greene can help you. You can email Ted at tgreene@tedgreenelaw.com or call (916) 442-6400 and your information will remain private and confidential.

Rebuilding your Credit After Bankruptcy

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Get a secured credit card. A secured card functions like a debit card in that you pay the bank the money beforehand, but your payments should be reported to all three major credit bureaus and go toward building your credit score. Only buy what you can afford, and pay the balance as often as necessary. Keep in mind to be cautious of high start-up fees. Be sure to ask if your transactions will be reported to all three major credit bureaus. After having your secured credit card for a year, ask to switch to an unsecured card with the same bank. Here’s a list of banks in Sacramento that offer secured credit cards:

• Bank of America
• Wells Fargo
• CitiBank
• U.S. Bank

Get a gas credit card. When you’re back on track using a secured credit card, you can try applying for a gas credit card. Try to get a card like this because gas is a necessary expense lessoning the urge to splurge. Be sure to pay the balance off as often as possible just like your secured credit card.

Get copies of your credit report from all three bureaus. You can get one report a year from each bureau for free. You can order your credit report online at: www.annualcreditreport.com

You can also call to have your credit report mailed to you. Here’s a list of the credit bureau contact information:

• Equifax: (800) 685-1111
• Experian (888) 397-3742
• TransUnion (800) 888-4213

Once you receive your credit reports, be sure to dispute incorrect information. To dispute your credit report you can use the online dispute form on the Equifax, Experian, or TransUnion website. Pay your bills on time. Get a calendar with all your due dates (or enter it into your cellular phone), and check it constantly. Make sure the money is ready ahead of time, and try to mail payments or do online transfers a day or two ahead of the deadline. Create a budget and figure out exactly how much
you can only spend each month.

Remember, people have walked this road before you. If they can make it, you can too. Try not to apply for too many credit cards or accept every credit card offer in the mail because it can have a negative impact on your credit score. Avoid spending money you do not have on the any type of credit card so that you can keep yourself from sliding into bankruptcy again.

Bankruptcy & Short Sale Experts

What Is Bankruptcy: Five Things You Might Not Know

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What Is Bankruptcy Really? Five Things You Didn’t Know About This Option

We’ve all heard of bankruptcy, whether we’ve seen it in a movie or read about in the newspapers. Bankruptcy is a means to resolve the issue of a debtor ETF, personal finance, bankruptcy, personal debt, being unable to repay his or her debts. You may not know anyone who’s been through the bankruptcy process, but the fact of the matter is it can happen to anyone. Here are some things about filing for bankruptcy that you may not have known.

1. You don’t necessarily need to give away your assets

Not all types of bankruptcy involve giving away your assets like most people believe. One type of bankruptcy lets you keep them, specifically Chapter 13 bankruptcy. Chapter 13 bankruptcy involves creating a repayment plan so that you’ll be able to repay your creditors without giving up the assets you require.

2. Bankruptcy does not release you from all debt obligations

There are certain types of debt that are impossible to discharge through bankruptcy. The most commonly known type is student loan debt, but those who’ve been through divorces also won’t be able to discharge payments to spouses or children of spouses. Some types of money owed to the government, like fines or recent back taxes, also must be paid regardless of bankruptcy status.

3. Filing for bankruptcy requires credit counseling

The 2005 Bankruptcy Abuse Prevention and Consumer Protection Act requires everyone filing for bankruptcy to receive credit counseling. The organization providing the counseling must be approved by the government, and individuals must have taken part in such counseling in the six months before they file for bankruptcy. For those dealing with bankruptcy, bankruptcy specialists like us might be able to help.

4. Getting credit after a bankruptcy won’t be as difficult as you think

Most people believe getting credit after filing for bankruptcy is nearly impossible. As it turns out, many lenders will let you take out loans just six months after a bankruptcy if a down payment is provided, and credit cards companies are generally also willing to issue cards with which you can rebuild your credit after you file. The reason for this is that once you file for bankruptcy, you won’t be able to file again for four to seven years.

5. You can repay some of your debt, but not all types of bankruptcies require it

It’s not necessary to repay any of your debt through Chapter 7 bankruptcy, though it requires you to liquidate all your assets. With Chapter 13 bankruptcy, however, you’re required to repay some of your debt.

Most people who live within their means and don’t need to borrow enormous amounts of money with a risk of losing all or part of their income will not need to worry about bankruptcy. But for those with no other options, bankruptcy can be a means to solve the problem with advantages and disadvantages that many people aren’t aware of.

 

source 

Chapter 7 vs. Chapter 13

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Which Chapter Does Your Bankruptcy Belong In?

Man calculating his bills while his family are on the sofaIn 2005, a major change was made to how Chapter 7 Bankruptcy is processed in the United States. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 instituted a means test to determine whether an individual should file for Chapter 7 or Chapter 13 as well as some other new requirements. Chapter 11 is typically for small businesses and will not be addressed in this article. Many may dispute how much abuse has been prevented and just how consumers are being protected by this law. Anyway, let us now focus on the means test requirement.

Test Your Means, Does It Amount to More Than a Hill of Beans?

The means test will determine whether you are eligible for Chapter 7 or 13. If you make more than the median income for your state, California’s median income for a single earner is $48,415, then you will have to file for Chapter 13. Why is this important? Chapter 7 liquidates your debts quickly whereas a Chapter 13 filing entails a 3-5 year payment plan with a strict budget. More on that in a moment.

What Does Chapter 7 Bankruptcy Mean to Me?

Chapter 7 bankruptcy is the most common form filed and we are experts on it here at the Law Offices of Ted A. Greene. Many of our clients ask what Chapter 7 requires. We do not need all of this information in the first consultation but as we work with you we will require:

  • A complete list of all creditors as well as the specific amounts and the nature of each claim
  • The origin, amount, and frequency of our client’s income
  • Last 2 years of most recent tax returns
  • Previous 6 months of bank statements
  • A list of our client’s property and all assets
  • A detailed breakdown of each client’s monthly living expenses including: food, clothing, shelter, utilities, taxes, transportation, medicine, etc.

 

Regardless of whether a married person is filing jointly or individually, the court requires this information for their spouse as well to evaluate the financial position of our client’s household. The state of California has its own exemption systems as allowed by federal law and requires each debtor filing for bankruptcy to use one of two schedules. We won’t get into the specifics of the property exemptions allowed in this article but it is extensive. Once you have properly filed for Chapter 7 bankruptcy your debts can be resolved in as little as 4-6 months.

Why Would I File Chapter 13?

The main reason many people file for Chapter 13 is because they make too much money to qualify for Chapter 7. An income that is higher than $48,415 for a single earner in California will typically push you over into Chapter 13. There are some deductions that can keep you in a Chapter 7 if you are slightly over the median income but we won’t address their complicated nature here.

The main feature of Chapter 13 is the repayment plan. This plan allows you to address your debts in payments as negotiated by the bankruptcy trustee. The plan is proposed in “good faith” with the full intention of completing the payments. The Chapter 13 repayment plan may take 3-5 years to complete. Many creditors owed for unsecured debts may receive as much as they would have in Chapter 7 bankruptcy, meaning nothing. If one is unable to complete a payment plan on Chapter 13, a Chapter 7 may be allowed after the failure of the payment plan. Many may use an emergency Chapter 13 filing to stall a foreclosure long enough to complete a short sale. There are restrictions in Chapter 13 which will require one to seek approval before applying for substantial new debt such as a car loan. While we do not process Chapter 13 filings here at the Law Offices of Ted A. Greene, we can refer you to someone who is quite capable.

What Should I Do?

If you are a California resident and are tired of creditors harassing you, tired of feeling overwhelmed and under-informed, or you just want to know what your options are please contact me, Ted A. Greene, today at 916.442.6400. Either a member of my experienced staff or I will talk to you. Your initial consultation will cost you nothing more than your time. You can also complete the form on our Contact Us page and we will call you. I personally guarantee I can process your Chapter 7 bankruptcy for less than any other attorney in the Sacramento metropolitan area, come in, sit down, and we can help you chart a better financial future for you and yours.

Five steps to repair your credit history

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legal guide If you feel like you`re overwhelmed by a mountain of credit debt, you’re not alone. With today`s economic recession, families all over the country are increasingly swamped by credit obligations that they can’t meet.

Whatever the reason for their financial distress, millions of people are in far more credit debt than they ever imagined possible.
If your credit score has taken a nosedive and you’d like to get it back on the road to recovery, here are five tips to help you get started on the right path.

1) Stay on top of your credit score. This means getting a copy of your credit report and making sure that there are no erroneous charges or late penalties listed. If you find that your credit report is mistaken in any of its figures, contact your credit bureau and your lenders to get the erroneous charges corrected.
2) Use a credit counseling service. This is one of the most important things you can do to repair your credit debt. A credit counseling service professional can give you the advice you need to manage your credit and become debt free. Credit counseling services operate by consolidating your monthly debt into one single bare minimum payment. In doing this, they work closely with credit card companies so that you can pay a reduced payment every month. In addition, if they know that you`re working with a counseling service, some creditors might be willing to reduce the amount you owe by as much as half, in return for a lump sum payment.
Credit counseling services charge a very small fee every month, but their services are absolutely invaluable when it comes to helping you get out from underneath a mountain of debt.
3) Stop using your credit cards. If you use a credit counseling service, this is the first thing that they`ll tell you to do. By eliminating credit cards from your life, you’ll be starting off with a clean slate and you’ll prevent yourself from incurring further debt.
4) Pay as much as you can afford on your cards each month. If you`re left with any disposable income at all at the end of the month, try your best to pay more than the minimum payment on as many cards as you can. Otherwise, it could take years, or even decades, to completely pay off the cards.
5) Make sure you pay all of your bills on time. Whether you`re paying through a credit counseling service or handling your remaining bills on your own, it`s crucial to pay everything on time every month. If you pay late, you`ll not only accrue late charges, but you’ll also be whittling away at that good credit score that you want to maintain. Even one late payment can damage your score, so budget yourself carefully so that you can pay on time from now on.
Whether you`re looking at debt relief or considering other resources to help you get out of debt, you`ll want to get advice from a reputable professional. By taking these important steps, you`ll eventually find yourself debt free and ready to face a better financial future.

Bankruptcy Signs

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There can be numerous signs of a person heading towards bankruptcy, but when times get tough, we may be too blindsided at the moment to realize it. Here are some signs that you may be heading to bankruptcy.

 

  1. Inadequate coverage for your health. Medical bills are one in the five factors of bankruptcies.
  2. Maxing out your credit cards or as some say, “wining and dining on a beer budget”. Credit card debt is one of the biggest reasons people go into bankruptcy. Sometimes, we may end up overspending and not realize it — or realize it but fail to act upon it. A good tip is to use no more than 30-40% of your available credit. This provides help in case you run into situations such as a job loss, illness, divorce, or any other threats to your income.
  3. Taking out more than you can handle on your home equity loan. Talk to a friend or a family member before taking out a credit line you’re your home. Will you be able to pay it off? Is it important? Sometimes it’s better to keep that credit line only for home improvements. If you decide to pull it out, make sure you can make your payments comfortably.
  4. No backups. If you’re living from paycheck to paycheck with little to no savings for emergencies, you can be at a higher risk for bankruptcy.
  5. Only paying the minimum on your credit cards. Because paying off your credit cards—while paying the minimum—can take 20-30 years, make sure what you’re buying now is really worth 20-30 years of paying it off.
  6. Co-signing troubles. Careful who you co-sign for, especially if you know that they aren’t so good with their own financials. It’s common factor for many bankruptcies when the person you sign for defaults, and you are held responsible by their lender.
  7. Receiving a tax lien or your home becomes foreclosed because you fail to make payments on time.

Manage Your Credit – The Do’s and Don’ts!

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Credit management is a plus!

Credit scores affect everyone and everything! Everyone’s got to have a credit score to survive.
Whether you plan to purchase a car, rent an apartment, or want to pick up a cell phone, having credit in your name is part of being approved.
Here’s a list of what to do’s and what to don’ts!
DO:

  • Open a bank account – it doesn’t appear on your credit report, but bank account numbers are usually asked for in a credit application.
  • Apply for a credit card – to avoid being denied, only apply for credit cards with the requirements you are likely to meet. A simple department store or gas credit card can be easier to obtain than a bank issued card because they don’t revolve.
    • If you have bad credit already, apply for a secured card – if it’s hard to get qualified, you can apply for a secure card. A secure card has a credit limit based on the deposit you make. A secure credit card works the same way a regular credit card does.
  • Charge purchases and make payments on time – this shows responsibility and can help you open new credit accounts if you need it. Remember that a $5000 credit limit is not an additional income!

DO NOT:

  • Overdraw your bank account – you will be charged with heavy fees and could damage a good reference.
  • Avoid missed / late payments – your credit rating will be damaged!
  • Cash advances – avoid cash advances! They’re expensive, and you can be charged a hefty upfront fee of 2-4%, plus the high interest rates. Also, there are no grace periods for a cash advance.

More Information:

  • If you’ve been denied credit, be sure to ask why. Reasons can include anything from income, employment, or credit history. It’s important to know because if you are denied multiple times on your credit report, you can be viewed as a negative to a potential creditor. View your credit history and if there are mistakes, be sure to have corrections made.

Credit Card Debt

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In 2012 Equifax reported that the Sacramento region’s credit card debt had fallen 1.4 percent. This comes as no surprise as many people decide to be more frugal and responsible with their money in tougher economic times.

“In places where the housing bust was the worst, such as Florida, California and Nevada, and in places like Detroit and Ohio where the recession was particularly deep because of a dependence on manufacturing, consumers are continuing to be prudent about using credit,” said Trey Loughran, president of the personal solutions unit at Equifax.

On average a household in Sacramento carries nearly $5,000 in credit card debt per household. This is lower than other cities in the state such as Los Angeles, San Diego, and San Francisco. Those three cities’ averages are much closer to $6,000 on average.

 

Equifax said that the total credit card debt of Sacramento fell from about $4.47 billion as of January 2012 to about $4.4 billion by January 2013. Contrast that to the $4.65 billion total regional credit card debt for January 2011. Our region’s numbers are piddling in comparison to larger cities. New York City, the number one city on the report led the country with a total credit card debt of $51.4 billion and Los Angeles came in a distant second at $35.3 billion.

 

If you have any questions or concerns about your own personal situation I would be happy to give you a FREE one on one legal consultation. You can call me at 877.442.4577 or send me an email at tgreene@tedgreenelaw.com or just visit my website at TedGreeneLaw.com.

 

Ted Greene

California Attorney and

licensed Real Estate Broker

Wage Garnishment! How do I stop it?

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The worst of the worst imagine this: As if your situation wasn’t bad enough and things financially tense enough, to make matters worse now you have people taking money out of your hard-earned – hard worked for paycheck. This is called a wage garnishment, and it happens to thousands of Americans day after day.

If you get deep enough in debt due to unforeseen reasons, your creditors may get court orders to garnish your wages. By law they can take your money right out of your paycheck.

 

However, bankruptcy is a law driven initiative designed to stop creditor collection efforts, including wage garnishment. If your paycheck is getting taken away from you and you are keeping less and less in your wallet, you need to talk to an attorney about your legal options. The worst thing you can do is ignore the issue and turn the other way. Wage garnishments do not disappear, wage garnishments are only dismissed until the debt is paid or discharged in bankruptcy.Stop the bleeding and contact us today! Our team of paralegals and attorneys will help you put a stop to your wage garnishment.

 

Kecia K. Lawson
~Paralegal
The Law Offices of Ted A. Greene, Inc.