Debt Relief IQ is a unique on-line consumer debt relief portal that automates the way in which consumers manage their credit debt, is 100% free of any upfront or enrollment fees and gives control back to the consumer utilizing easy to use software. In an environment of extreme government regulation where little help exists to help the consumer navigate back to financial solvency, the consumer is in dire need for simple, straight forward tools to moderate their spiraling foreclosure rates and credit debt problems.
Unfortunately, the lender servicers are clearly not doing their part. I recently spoke to a colleague at one of the Mega-Servicers who shared with me that out of the last 20,000 Home Affordable Modification Program (HAMP) packages sent to homeowners that only 400 of those packages resulted in a completed loan modification. In fact, the Amherst Securities Group recently released figures showing that 80% of all nonperforming private-label mortgages have not been modified after 12 months and as of Sept. 30, 2010, that the Fannie Mae servicers had completed only 321,800 modifications including 158,800 restructurings that meet Home Affordable Modification Program (HAMP) specifications out of nearly two million note holders believed to be eligible for loan work-outs. Fannie has 60,500 borrowers in HAMP trials, which represents only 6% of its seriously delinquent loans.
With the vast majority of homeowners not being helped by loan modifications, many consumers have turned to short sales to try to avoid foreclosure. In a short sale, the lender must agree to accept less than the original note granted to the homeowner. A distressed homeowner that can absolve their obligation through a short sale instead of foreclosure will mitigate the damage to their credit, as the negative effects of a foreclosure can last up to ten years whereas the damage created by a short sale to consumer credit is generally limited to the number of monthly delinquencies up until the short sale (3 months late, for example).
Typically, most lenders have prefer to facilitate the short sale process because it is less costly than foreclosure. With foreclosure comes preservation costs, for example, which are the costs associated with maintaining the property such as grass cutting, pool maintenance, HOA fees, etc. and can add up to several thousand dollars that the lender servicer must pay; remediation costs, such as replacing stripped copper piping or repairing extreme damage are required to be paid in order to get the foreclosure ready for resale. Even though a short sale is generally less costly to the lender servicer than foreclosure, the process can be long, arduous, and riddled with compliance issues that have caused lender servicers to delay short-sale approvals, even though the general economics is better than foreclosure.
Real Estate Agents
Although many Agents are making full disclosure to homeowners as to all of their available options, many Agents are motivated strictly by making transaction fees at the expense of homeowners and even the lenders themselves. In Connecticut, for example, two real estate agents found a way to profit: Sergio Natera and Anna McElaney were convicted in Hartford’s federal court in August after pleading guilty to fraud. Their crime involved persuading lenders to approve short sales without disclosing that there were better offers, completing the short sale then flipping the houses for a profit.
According to the Bloomberg Businessweek publication, “the Federal Bureau of Investigation, the California Department of Real Estate and mortgage finance company Freddie Mac have warned that such schemes may be spreading after a plunge in values left homeowners owing more than their properties are worth. The scams threaten to deepen losses for lenders that are increasingly agreeing to short sales as an alternative to more costly foreclosures.”
“Short sales are an important tool that can help both the bank and the borrower,” said Morgan McCarty, executive vice president for mortgage servicing at Birmingham, Alabama-based Regions Bank, which lost money in the Connecticut case. “It’s just that criminals are always trying to find ways of profiting.”
Distressed homeowners are also the target of these “rogue Agents” as many homeowners are still falling prey to high pressure tactics to get the homeowner to agree to a short sale. Of course, these rogue Agents are not following the guidelines established by RESPA (Real Estate Settlement Procedures Act, the 2008 law requiring that consumers receive disclosures at various times in the transaction. It outlaws kickbacks that increase the cost of settlement services. RESPA is a HUD consumer protection statute designed to help homebuyers be better shoppers in the home buying process, and is enforced by HUD), which is creating down-stream liabilities as homeowners sue their Agents and lenders after “seller’s remorse” kicks in after they are faced with the finality of losing their homes.
Homeowner Representation
Even with this high element of unscrupulous behavior by many Agents, the fact remains that the “good” Agents are needed to provide the distressed homeowner with the facts about real options. The short sale option remains a viable option for some distressed homeowners, not all homeowners. Although it is widely accepted that the lender servicers have failed to implement loan modifications on any scale, Agents have a fiduciary responsibility to talk straight to distressed homeowners by first examining possible loan work-out options for the mortgage before they begin to cram the short sale concept down the throats of the homeowner; in addition, Debt Relief IQ works with Real Estate Agents nationwide by giving them the tools to help make a positive impact on the distressed homeowner, not just make a transaction fee from them by also encouraging distressed homeowners to examine all of their debt relief options: Debt Relief IQ administers a program that attacks the major sources of consumer credit debt, including but not limited to credit card debt, personal lines of credit and to address the “total debt’” picture for each consumer. Debt Relief IQs borrower debt relief model has yielded greater secured loan performance by incorporating the total debt service approach, a clear departure from the limited Servicer approach. Debt Relief IQ is a practical and economical (no enrollment fees, no up-front fees) approach to debt settlement and debt relief. Debt Relief IQ provides a unique approach to settling unsecured credit debt that puts the control in the hands of the consumer by providing an automated on-line software program that guides the consumer to settle their consumer debt with an easy to use step-by-step process. In many cases, an unsecured debt settlement approach is required in order to qualify for the loan modification as to meet debt-to-income ratio requirements. If a consumer can reduce their monthly unsecured credit debt payments by enrolling in a program that saves the consumer money, or employ debt consolidation strategies, that cash can be used to pay the mortgage.
If more Agents would be willing to counsel distressed homeowners versus run rough-shot over them for the sake of making a commission, they may be able to reverse the increasing negative stigma the real estate profession has garnished.
For those consumers that would information on other Debt Settlement programs contact by Debt Relief IQ at
www.debtreliefIQ.com.
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