The pitfalls of trusting your bank; Beware The Foreclosure Sharks

by Dan Havey on August 23, 2011

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Today but what I see here and I was thinking about this the other day here is it reminds me a lot of the old Peanuts comics where every fall Lucy would get out there with the football and she would set it down on the ground, and she would coerce Charlie Brown into coming along and kicking the football

Well of course as we all know Charlie never got to kick the ball, Lucy always pulled it out from underneath him and I kind of look at the mortgage industry, the servicing end of it in particular that way, because you have to think about it, in many cases the loan that you were put into was not a good loan in the first place

The person who gave you that loan knew it was not a good loan, the Wall Street banks that came up with these crazy ideas should have known better

Now admittedly they didn’t otherwise they would not be out of business today but they should have known that these were not good products

Yet when you are faced with an issue regarding your house so many people go back to the bank, like Charlie Brown going back to Lucy and believing that THIS time Lucy is not going to pull the ball away

Well what is going to keep the bank from not pulling the ball away from you this time? Absolutely nothing

I love that analogy; everyone remembers the Charlie Brown show and the comic books like you said

The loss mitigation departments, they are not all evil

Another thing I want to point out too, reeling back just a little bit, you mentioned the people who put these people into these loans knew that they were not good loans, my thoughts are from some of the ones that I have seen, that you and I have seen doing the forensic audits, they could have qualified for an FHA loan in those times but it was so much easier for these people to put them into these sub prime loans because the documentation was easier, and it was just easier

It is not just that they are easier; I know that your firm, Velocity Financial is FHA approved but what percentage of lenders today when we probably have maybe 30% as many lenders as we had two years ago, what percentage today is FHA approved? Actually in the state of Arizona of the lending institution less than 15% of all qualified mortgage firm, banks, credit unions, less than 15% are licensed by the federal Housing Administration, Velocity Financial is proud to be one of those firms

What I saw back in the peak of the market is of course everybody thought that real estate was going to go up for ever, every body wanted to jump on board and buy 3,4,5,6 properties and I always tell the story that I knew we were in trouble, I knew we were hitting the top of the market long before I developed any of the models when I walked into our bank one day and I saw that they had a loan that was 100% financing for someone to buy an investment property and they did not have to prove their income and the only needed a 620 FICO score which considering everything now, I mean Michael to get a Fannie Mae loan today what kind of a FICO score do you need? If you are an investor? If you are an investor you need 720

720 and probably 20% down At least 20% down And certainly it is not stated income anymore

No that does not exist, and significant cash reserves the whole nine yards

So these banks knew the kind of garbage that they were giving to people and yet we are supposed to trust them to get us good loan modifications and I think that in one of the later segments we are going to talk about the newest guidelines that just came out from Fannie Mae and Freddie Mac regarding their new fancy smancy loan mod program and to be honest with you I do not think it really does much for people at all

We will talk about that in the next segment and to the people who are in the mortgage or real estate industry or who have been in the real estate or mortgage industry it is going to sound a little bit like a comic bit because this may as well be bath tissue, I do not even know why they came out with it but it is good it is good stuff, we are going to talk about that along with a few other things, so real quick I know we haven’t had too much of a chance to talk about “The Foreclosure Sharks”, Dan but we will touch on that a little bit later

How do people get a copy of this white paper, “The Foreclosure Sharks” these are things that people need to be looking out for? Yes, for the “Foreclosure Sharks” you can go to my website, mortgageanswerman.com, there will be a link there you just click on it and pick yourself up a copy and it will help if you are in a foreclosure situation if people come knocking on your door it will help you to at least know what to look out for

So mortgageanswerman.com for “The Foreclosure Shark”, also for more information on loan modification or if you are not sure if you need a loan modification, a refinance, or even a short sale, you want to call 888-Mod-Info or if you want to go online you can go to modificationhotline.com for more information, or if you want to talk to Dan or myself directly here locally in Phoenix Arizona you can call (480) Velocity, folks I know that was a lot of information, we will be back in just a few minutes and we will get right back into this
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