AAA Home Rescuers, LLC

REGULATE ME? YOU GOT IT!

cdreier — Fri, 01 May 2009 00:19:01 +0000

Two weeks ago, two managing members of AAA Home Rescuers, LLC. went up to Carson City to become unpaid lobbyists in order to push some type of remedy for the epidemic that has swept over our industry. The epidemic is that this industry is GROSSLY under regulated and in desperate need of some Rescue Rangering.

As we are extremely passionate about changing the future of this industry and the future for distressed homeowners, we learned very quickly. Here is the list of people they talked to:

- Policy Maker Dick Cooper

- Majority Leader of the Senate Horsford

- Commissioner of the Consumer Affairs Division Sharon Jackson

- Majority Leader of the Assembly John Oceguera

- Senator Copening

- Director of the Department of Business and Industry Diane Cornwall

- Senator Parks

- Minority Floor Leader of the Senate Raggio

- President Pro Tempore of the Senate Schneider

- Chairwoman of the Commerce and Labor Committee Senator Carlton

- Assemblyman John Hambrick

- Former Chief of Police in Henderson and former Majority Leader and Speaker of the Assembly, Richard Perkins

- Assistant Majority Floor Leader Assemblyman Conklin (AUTHOR OF BILL AB 152)

- Speaker of the Assembly Barbara Buckley

- Senator Amodei

- Senator Hardy

- Senator Rhoads

- Committee Chairwoman Carlton

- Commissioner of the Mortgage Lending Division Joseph Waltuch

- Minority Whip of the Assembly Chad Christensen

This is simply the people that were talked to. This blog would be five pages long if we included all of the conversations that were had with these people. These conversations set the groundwork for this last Monday (April 27^th), the hearing for the senate Committee of Commerce and Labor.

At this hearing, different bills were heard and testified on, including the one pertaining to our industry, AB 152. The pertinent issues that Mandy addressed in the bill were these:

· Any person who performs loan modification services must be licensed pursuant to chapter 645B of NRS. Any person wishing to perform these services must meet the requirements of those who originate loans

§ WHY THIS NEEDS AMENDING: Right now the current regulations say that no one who holds a license (mainly loan officers) may not act in the same scope of that license and do modifications (NRS 645). It is also later stated in this very same bill! So it seems extremely contradictory to put the licensing for the loan modification industry under that of loan officers. A lot of the reason why people are in situations like these with loan fraud, etc. is because of predatory lending on behalf of loan officers! We’re not saying they’re all bad of course, it just seems like a “duh” statement.

· Any attorney wishing to practice loan modification or foreclosure consulting in affiliation with one of these licensed companies must comply with these statutes.

§ We think this is great! That would eliminate the “we’re all attorney” scams…US Justice Foundation? The only issue there would be is that attorneys still doing modifications without the affiliation of a licensed company (unnamed personal injury attorney in Las Vegas…among others) are simply regulated by the bar. So basically not really regulated.

· People and companies who are sponsored by a state or local government program such as the Department of Housing and Urban Development (HUD) will be exempt from the licensing.

§ WHY THIS NEEDS AMENDING: uuuhhh, WHY are they exempt? What education do they have AND what incentive (being a non-profit organization) do they have to get educated??? These companies are the ones who homeowners go to FIRST! They have the most need for education and regulation! We had a client that had been with one of these non-profit companies for 6 months when he came to us. He had gotten absolutely no results. Within 12 days (12 d-a-y-s!) we had gotten him a loan modification that was $200 LESS than he had contracted us to get. Now 12 days is not typical, just so you know. It’s just to illustrate the fact that this was an extremely simple file with an easy bank. Why did the nonprofit not get anything done in 6 months? Maybe because they didn’t know how to???

· One section discusses loan modification companies and foreclosure consultants not being able to accept upfront fees for services before they are rendered. Also that a client has a right to know where the funds are going if they are to be disbursed to any 3^rd party.

§ WHY THIS NEEDS AMENDING: I do agree that this has been the biggest area for scam artists to cash in on. Which is exactly why licensing and regulation is needed. However, there needs to be protection on both the consumer side and the business side. Every single client that we did not collect an upfront payment on, still to date, has NEVER paid us for services rendered. We’ve even take $1000 off of a payment and literally taken homes off of the courthouse steps. So there must be a compromise. Mandy came up with creating some sort of broker trust account or escrow account that money will be held in until services are rendered. That way both parties are protected in the transaction.

There are other little things that we have requested be amended, however this is the meat of it. Do you know what the great thing is?? On Monday, Mandy testified to this Committee including the author of the bill, Marcus Conklin and they AGREED. Conklin has spent a great amount of time on this bill and we are very fortunate and proud to be a part of recreating it. The amendments are currently being drafted and will be sent to Conklin to review and then to AAA Home Rescuers to review!

Much research and time and effort was put into making this happen and it has!

So it’s happening folks…REGULATION IS COMING!!! As soon as the bill is passed, licensing and regulation will be implemented and the GOOD GUYS WILL PREVAIL!!

As Legislation Winds Down, Who Is Going To DO Something?… US!

cdreier — Wed, 08 Apr 2009 00:04:55 +0000

How will this legislative session wrap up in regards to loan modifications? There are many opinions on what is and is not appropriate. Then there is the cold hard truth. As of right now this industry is not regulated at all and the continuation of this would be of detriment to all involved. From the homeowners to the bank to the industry professionals making a living by helping others, the ramifications of deregulation stretch far. Right now we are winding down on this legislative session and if nothing is to be decided upon during that time, then nothing will happen for two years. I am sure that many of us would not even like to think about what those next two years would hold. The suggestion that is currently on the table is that the loan modification industry is placed under the licensing of loan officers. At first sight I found this to be quite ludicrous since the current statutes forbid people doing loans, selling real estate or acting as escrow officer to represent themselves as any of those professions in those places of profession if they wanted to do loan modifications. To be completely honest the idea pissed me off completely. I wondered why on earth I and those that I work with would need a license to something that we do not do, like originate or write loans. Secondly, why do I have to work under some broker who has far less knowledge than I do about the industry? It just did not make any sense and then I spoke to the Mortgage Lending Division Commissioner, Joseph Waltuch. He informed me that the proposed budget cut that would eliminate or “merge” the Mortgage Lending Division and remove important officials who could make the laws around this industry work, was denied by the legislative budget committee. This does not mean that the MLD has gone away and it is totally a step in the right direction. So now what? We get put under a licensing that does not really fit the job description but does what is absolutely necessary, which is regulate. That is when a fabulous, educated and honest company such as ours comes along and pushes for amendments and education for our industry. This will allow the industry to flourish while providing the most successful outcomes for the homeowners of Nevada. The members of AAA Home Rescuers will be making a visit to Carson City in the near future to take a stand and present what we believe will protect all of those who are being affected by this housing crisis in an efficient, fair and successful manner.

“Do it yourself” and HUD programs: may save $ now, but cost you in the long run?

cdreier — Thu, 12 Mar 2009 18:05:11 +0000

Many recent articles from local news stations have steadily condemned the loan modification industry. I do in fact agree with some things. However, I am sick of the broad generalizations, the accusations, and the “red flags” from many news reporters with no actual knowledge of the subject. They massage certain situations to make it look as if you can trust no one. The people you cannot trust are the banks themselves. A person in this situation must have someone without emotional attachment to the home and professional knowledge to assist them if they want the best end result. I am done with reading all of the bad news stories about people getting screwed. I know that my company has helped many people in bigger ways than the homeowner thought possible and I don’t see any big write ups about us.

This “great” advice from these articles tells people to do it themselves or to use a HUD approved program. You would be shocked and amazed if you saw the number of people who come to us and are more than willing to pay for services because they are sick of the never ending waiting game with these free services. They come from some HUD approved program understanding that you get what you pay for. A supposed “expert” from one of these programs even went as far as to say that a gambling addiction can be considered a hardship. Gambling? Really? Oh, that is if they have the problem under control now. How do you determine that? Is it really responsible for someone who will spend their mortgage payment on a few games of black jack to own a home? Is that good, sound, responsible advice? What about not only taking a look at if it can be done but if it should? Maybe that person could invest that extra $500 they save a month by renting, into some therapy? Pulling the wool over our eyes on what is really going on out there is what got us here in the first place. We would not take on something like that, it does not make sense unless there is some good documentation to back it.

In some other “great” advice about doing it yourself they said that you must get a hold of the home retention or loss mitigation department. They are not usually the ones that make the decisions, at least not the big, fat, juicy ones that cut your mortgage payment in half. Very few people have any success working on their own. And when you look at the fact that we usually get people a mortgage payment that would be $300-500 a month less than if they had gone at it on their own, and they more than recoup their costs in a year. Another do it yourself tip of the day was to call the bank every other week to make sure things are moving along. That is a great way to make sure that your foreclosure is moving along. We check on a file with the bank every three days. There are thousand of these things going in to the bank. If we do not call, then the file does not stay on the top of the pile. It is forgotten.

I understand that the media thinks that they are helping people, but I am going to suggest that they do what we do in our modifications. Look at all of the picture, from birds eye view. Get the entire perspective of what is going on, and then bring the costs and benefits of all choices. They are leading people down a path of over opinionated failure by putting out these articles. I would invite them to come to our workshops and find out what is really going on before they write another article about this industry.

How to avoid a bad “Ferm”

cdreier — Thu, 12 Mar 2009 17:27:43 +0000

There are many firms out there that are taking people’s money and not providing services. This does not include everyone though. The most recent one that has hailed much coverage is The US Justice Foundation. Here are some immediate red flags that come up for me as I am looking at this company:

1.) They used a name like US Justice Foundation. The only companies that should use names like this are those that are actually backed by the government. This is a good sign of someone who is attempting to use the name as manipulation of the situation. The services and expertise should speak for themselves in these matters.

2.) There is not a set fee. From my understanding this firm was not only taking their $2500 retainer but they were syphening money from people thereafter. A company should have one fee and that fee should be for loan modification services. No nickel and diming and no “it is more if it takes longer”. We charge one fee of $2900 and we go after multiple approaches with the bank. If these approaches do not work out, we can also assist the person in their leaving of the property. No matter how many times we have to go back to the bank, the fee remains the same. One mortgage, two mortgages, the fee remains the same.

3.) There is a 100% money back guarantee on the service. I see a problem with this for two reasons. One would be that there is a service that is being provided. To properly do all of the things that are involved to get the homeowner the best modification possible it takes a good chunk of money for the company. The other reason, I would say, is that if they are offering a money back guarantee they do not know what they are doing, are not putting in the necessary effort, or do not plan on giving the money back.

4.) They are making a big legal production out of the modification process as opposed to taking the necessary steps to just get a modification done. A lot of companies do not really know what they are doing. They do not know how to play the game that the bank plays. A lot of them just jumped on the loan mod band wagon to make money without doing the necessary research to do it efficiently.

5.) There is not a specified end result. Many companies say that there is a money back guarantee or that they will modify your loan. However, very few companies ensure that what they are doing in your modification is the best end result and that is really works for you. Your full financial picture should be taken into consideration, i.e. what kind of hardship that you have, and what kind of debt that you have. Then a bottom line number should be picked that will have to met in order for services to be completed. Then you would be shown how that number will also make sense to the bank. It can be a timely process but is the only way to keep people honest.

6.) Company has no financial backing. To be honest with you, maybe Jack Ferm was not intentionally stealing the money. Yes, he lied about being an attorney, but did have attorneys on staff. The issue was more than likely that they did not know what they were doing, did not have the funds to cover the companies overhead, and used the client’s funds instead. This is how many companies are operating. They know that they have 60-180 days to work on the file (it should only take 30-60) so they know that by the time they might have to give the money back, they can pay it with the next client’s fee. We do not pay the bills on unearned funds. To do this thing right there needs to be substantial money in the beginning to actually build the foundation it takes to run this business.

7.) If they send information to you that you did not request, then run. If it mentions something about the benefit of the new US Home Affordable plan, run.

So Much Money And Such Little Return

cdreier — Wed, 11 Mar 2009 02:40:04 +0000

Ever since Hope for Homeowners came out and did nothing for homeowners I have been a true skeptic of any program that is said to help the homeowners. At least any one that the governement comes out with. I think that it is wrong that we are paying more taxes to let the banks sleep better at night. I think that it is disgusting that our leaders are OK with everyone getting their hopes up for something grand, only to find that it simply does not apply to them. Between the two housing bailouts there has been over $825 billion spent, but on what? It is now said that the government is “saving” the remaining $350 from Bush’s bailout to save the banks and provide more capital for lending. Capital for lending? Give me a break here! With all that is going on- families being thrown out of their homes onto the street, crime and divorce increasing, is more lending capital and rescuing banks really our biggest concerns? Here is the truth of the matter; last year American’s lost $2.4 trillion in housing values. All of this money spent to “help” us could have really helped by reducing 1/3 of that deficit. Instead about $75 billion of it will go to help 1/3 of homeowners have a lower rate. I don’t know about you, but I would personally rather have 1/3 of what I lost in my house wiped away than have a 5% interest rate. But that will never happen until we really start looking into what is going on and see that the people that are being taken care of in these efforts are not the homeowner, they are not your everyday person. They are dressed up and sold to look that way but all they are is another scarcity tactic for the rich to get richer and the poor to get poorer. Now don’t get me wrong, there is potential for something different. I just don’t know if we should be counting on some government program to do it. I know that we all want to believe that there is free help, but at this point there is not. People will just keep waiting and waiting for that day when they will be “saved” by our government, that is until they find themselves homeless because the government was just saving themselves.

Fannie and Freddie…said to save the day, or save themselves?

cdreier — Wed, 11 Mar 2009 02:07:04 +0000

In September of 2008 Fannie Mae and Freddie Mac were in trouble and were taken over by our government. The companies are said to be on shaky financial ground still, yet are providing $20 billion of the $75 billion that is available for the Home Affordable Loan Modification Plan. Why a company that is on shaky financial ground would do such a thing is beyond me until we look at a couple of facts that are not pieced together in your everyday article. These companies are receiving $100 billion dollars more each as a line of credit from the government. So who cares if we give away $20 billion, which is a write down for them, because we have ten times that on the way. There are some holes in this story though. Fannie and Freddie are both publicly and privately owned, so some of these efforts that the government is using our money for might not even happen if the investors do not agree. Although the government took over control, they do have to keep the best interest of the investors in mind when they make decisions. This is just another reason why I believe that this plan was haphazardly put together to “save” us when it is really creating a debt that our grandchildren’s grandchildren will be paying off.

Will The Plan Push Through?

cdreier — Wed, 11 Mar 2009 02:02:27 +0000

In order for those who have a privately backed mortgage to get a modification, the investor will have to approve of the modification. In the Home Affordable Plan it states that any bank that is participating must make a “good faith effort” to get the investor to agree to the terms of the modification. What is a “good faith effort”? I am not sure how that is going to be measured and if it is going to be worth it to the banks to attemptit. There is not enough protection for the servicers from the investors if they are to make the modifications with the investor’s good graces. So this still leaves America in the position of needing some genuine support in remedying their troubled mortgages. This accounts for over 60% of the delinquent mortgages. The truth of the matter is that the only people who have a chance of benefiting from this program are those that have mortgages backed by Fannie Mae and Freddie Mac, which were taken over by the government in September.

The story behind all of the so called “incentives” of the Home Affordable Loan Modification Plan

cdreier — Wed, 11 Mar 2009 01:57:41 +0000

Let’s go through all of these “incentives” and see if they really make sense. The first incentive goes to the servicers for modifying the mortgage. Just so you know, the servicer does just that, they service the loan. The real risk is taken by the investor who backed the loan and the homeowner who put their money and credit on the line for the loan. That fist incentive that goes to the servicer is $1000 for bringing the mortgage payment down to 38% of the homeowners income. The next incentive goes to……….you guessed it, the servicer. The next incentive is dollar for dollar compensation for bringing the paymentfrom 38% of the homeowners income to 31% of the homeowners income. But wait, there is more. If the servicer can get the investor of the second mortgage to forgive the mortgage or modify it then the servicer will receive an additional $250. Finally, the servicer will receive additional money for every year that the modified loan remains current.

As far as the homeowners and actual loan investors are concerned, there is a smaller piece of the pie to be received. If you are a homeowner and modify your loan and remain current on your payments you will receive a whopping $1000 reduction in your principal balance every year for the following five years. So that means that they are telling me that if I modify and stay current on my $230,000 mortgage for the next 5 years then I can owe just $225,000 in five years. That would sound great if my condo were worth more than $65000 right now. I think you get the point. I am guessing that at this point it is more than obvious what little is given to the homeowner. But the ones who took the most risk, the ones who backed the mortgages, got the short end of the stick - the investor of the loan. All the investor is eligible for in this plan is to receive $1500 for modifying the loans of homeowners that are still current. Wow, that is a lot of money. All sarcasm aside, it is obvious that the people who really need the help were not thought of when this plan was written. When it comes down to it, the investor is the one who has their money on the line and must agree to these modifications. It just does not seem as though there was enough emphasis put on enticing them to do these modifications.

Investors must participate for this plan to work, but 60% of delinquent loans owned by Investors?

cdreier — Wed, 11 Mar 2009 01:48:43 +0000

Many of the loans that are in trouble right now are backed by private investors. With the new government program for loan modification the interest rate on a troubled loan would be reduced to 2% for 5 years and then increase by no more than 1% a year up to what the prime interest rates are now. When I look at this information, it would not make sense for these investors to keep investing in loans. If the interest rate is 2% and the servicing company has to get paid as well, how much could the private investor really be making? At this point they might make more money if they just put it in a good savings account. It seems like too much of a risk with not enough reward for the investors to go for this. Now in our business we see investors agree to 2% for a year or two, but to have it there for 5 years and not reach today’s already low rates for at least 7 years does not seem enticing enough to me. Just another red flag on this plan that seems great based on all of the propoganda, but that is all it really seems to be.

More Power to The Judges: Is This a Good Thing?

cdreier — Mon, 09 Mar 2009 04:52:16 +0000

On Thursday afternoon it was ruled that bankruptcy judges would be able to modify the mortgages of homeowners filing bankruptcy who would like to keep their homes. Judges have had the ability to reduce many forms of debt when a person files bankruptcy, but have not had the power to reduce the mortgage on a primary residence until now. The idea behind giving this power to the bankruptcy judges is that it will provide investors and servicers with incentive to modify the loan before it goes to bankruptcy. Some call it a plan and some may see it as a form of blackmail. I guess that one is left up to perspective. One hole in this plan would be that bankruptcy has income limits so some would not have the bankruptcy escape route if they did not obtain the modification. In defense of this action they did put in a stipulation that the homeowner would need to make a “good faith” effort to get a modification before filing the bankruptcy, whatever a “good faith effort” is. Beyond these two small issues, there is one huge issue. Many experts say that if you give this type of power to the bankruptcy judges, the power to lower rates and principal, then the risk for investors when lending would go up and they would lose more money. In turn they will increase interest rates when lending to compensate for the money lost and the risk leaving new loans more difficult to obtain. Let me acknowledge again that I do see there is an effort being made here to help the homeowner however I do not believe that this decision was made with enough professional industry insight.

Nevada, Arizona, California and Florida were apparently not considered in the housing crisis relief fund!