By now everyone knows that you can call your bank to discuss work-around solutions if you're having trouble keeping up with your mortgage. What's not well known is the risk you may face from some financial institutions. The banks are motivated to modify your loan, only if it serves their best interest. There is an endless stream of complaints from hardworking consumers who are getting no where with their banks. Read "The Niche Report" on the www.ec360.org website that further documents the concerns throughout America.
Case in point, I recently spoke with a potential client about a refinance of her primary residence. She was confused about why her bank was trying to get her to refi her first mortgage of $216,000 down to just $157,500. This wonderful woman who everyday cares for people with disabilities called her bank pro-actively to see about getting out from under her current loan because a Balloon payment was coming due in January 2010. She filled out the application and sent in her financials and bank statements. Her bank reserves showed over $100,000 in various assets that she needs and uses to care for her handicapped 10-year old daughter. She works full time caring for disable children and has a very limited income. The bank saw the large balances and sent her a new loan commitment document. She began communicating with the loan officer at the bank via email and was smart enough to save the emails. The loan officer at the bank was very vague with disclosure and never really spelled out the terms of the loan. The woman called her Realtor and her Realtor contacted us.After looking at her original loan documents with her Realtor, it was clear why this bank wanted to get her to come into close with $75,000 and switch her from a balloon, to a 3/1 ARM at 5.5%. When she emailed asking why they sent her a ARM rather than a 30-year fixed, they responded to her by saying, "you can always refi in 3 years".
Whats frightening is that this bank sent her a Residential Mortgage Loan Commitment that lacked the necessary legal disclosures for her to clearly understand what the loan would cost her.What we found after some due-diligence was horrifying! To summarize the facts, we will begin with the first loan. The original Truth-in-Lending Statement (TIL) was off by .25%. Shenever received her final HUD-1 closing statement and there were significant issues with the way her original loan was cast. Next, the bank was trying to literally steal her liquid assets from her bank account which she needs to support her disable daughter. The banks goal was to get into a positive equity position on the property instead of being upside down. There was no reason for the bank to send her a commitment letter for another Adjustable Rate loan when they could have easily offered a 5% 30 year fixed rate mortgage. Further, the new loan documents (which she never signed) also had mistakes on the Truth-in-Lending (TIL) just like the first loan.
We are thankful for the quick thinking of the homeowner and our Realtor partner who brought this to our attention. We're in the process of notifying the lender in writing of the violations and EC360 has already begun to go to work on behalf of the homeowner without any up front fees. For anyone who gets that tinge in the gut saying "somethings wrong" it's usually always right. Listen to your gut instincts, call your Realtor, if you have one, to get an objective opinion, or call Empowered Consumers for honest objective advice at no cost.
Monday, November 2, 2009
"Fall Street" not Wall Street
Yet another Wall Street big wig finds himself in cuffs and on camera after being caught insider trading through a series of contacts and informants. Media is once again stating "this is a wake up call for Wall Street", but how many time have we seen this in the last 7 years? Over 100 high profile executives have been found guilty of fraud. I suspect that most Americans are like me and don't even blink at these stories. By now we understand that this is just the way the system works.
Wall Street is rampant with fraud and corruption, government targets those high profile people that get headlines. The Attorney Generals get on camera saying this is our way of protecting consumers. Funny, American consumers never see a penny of their lost investments - instead the government fines the firms and uses that money to expand an already bloated Government.
CNN Money just reported the nation's tally of bank casualties hit 99 last month when state regulators closed San Joaquin Bank, based in Bakersfield, Calif. This was the tenth bank to fail in CA this year. There are about 8,000 banks in the nation, and an average of 10 banks have failed per month this year, nearly four times the number that failed in 2008. This is the highest tally since 1992, when 181 banks failed. Though 2009's count is still far from 1989's record high of 534 bank closures which took place during the savings and loan crisis, the FDIC revealed there are now 416 banks at risk of failing -- the highest level in 15 years. This year's failures have reduced the FDIC's insurance fund to $10.4 billion from $45 billion a year ago. Faced with dwindling funds, the FDIC has to figure out how to raise money to restock the fund.
Goldman Sachs, the New York-based investment firm turned another eye-popping profit in October, earning $3.2 billion in the third quarter, as revenue from trading rose fourfold from a year ago. As Wall Street firms typically do, Goldman set almost half that sum aside to compensate its workers. Through the first nine months of 2009, the firm socked away $16.7 billion, enough to pay the average Goldman worker $526,814. The bonus pool is on pace to hit $21 billion for 2009, which would match the record bonus payout of 2007. Goldman said it won't decide the size of the bonus pool till year-end.
WOW all this while the average consumer is trying to figure out if they should modify, short sale, or walk away from their home. Not a full year ago HUGE sums of taxpayer dollars were funneled to financial institutions. Critics charge that the lion's share of Goldman's profits comes from making big bets using cheap dollars printed by the Federal Reserve. Plus, given the crisis that followed the failure of Lehman Brothers, there's a sense that government officials won't let big firms go bust. That in effect gives too-big-to-fail firms a license to bet the house. Again we see big Wall Street firms using tax payers’ hard-earned dollars to bet on investments with no guarantee of success.
So what do you do? Educate yourself, reduce your debt, manage your money effectively, and don't gamble. EC360 provides objective information that helps homeowners preserve their equity and capital. Find out more about the Empowered Consumer movement at www.ec360.org
Wall Street is rampant with fraud and corruption, government targets those high profile people that get headlines. The Attorney Generals get on camera saying this is our way of protecting consumers. Funny, American consumers never see a penny of their lost investments - instead the government fines the firms and uses that money to expand an already bloated Government.
CNN Money just reported the nation's tally of bank casualties hit 99 last month when state regulators closed San Joaquin Bank, based in Bakersfield, Calif. This was the tenth bank to fail in CA this year. There are about 8,000 banks in the nation, and an average of 10 banks have failed per month this year, nearly four times the number that failed in 2008. This is the highest tally since 1992, when 181 banks failed. Though 2009's count is still far from 1989's record high of 534 bank closures which took place during the savings and loan crisis, the FDIC revealed there are now 416 banks at risk of failing -- the highest level in 15 years. This year's failures have reduced the FDIC's insurance fund to $10.4 billion from $45 billion a year ago. Faced with dwindling funds, the FDIC has to figure out how to raise money to restock the fund.
Goldman Sachs, the New York-based investment firm turned another eye-popping profit in October, earning $3.2 billion in the third quarter, as revenue from trading rose fourfold from a year ago. As Wall Street firms typically do, Goldman set almost half that sum aside to compensate its workers. Through the first nine months of 2009, the firm socked away $16.7 billion, enough to pay the average Goldman worker $526,814. The bonus pool is on pace to hit $21 billion for 2009, which would match the record bonus payout of 2007. Goldman said it won't decide the size of the bonus pool till year-end.
WOW all this while the average consumer is trying to figure out if they should modify, short sale, or walk away from their home. Not a full year ago HUGE sums of taxpayer dollars were funneled to financial institutions. Critics charge that the lion's share of Goldman's profits comes from making big bets using cheap dollars printed by the Federal Reserve. Plus, given the crisis that followed the failure of Lehman Brothers, there's a sense that government officials won't let big firms go bust. That in effect gives too-big-to-fail firms a license to bet the house. Again we see big Wall Street firms using tax payers’ hard-earned dollars to bet on investments with no guarantee of success.
So what do you do? Educate yourself, reduce your debt, manage your money effectively, and don't gamble. EC360 provides objective information that helps homeowners preserve their equity and capital. Find out more about the Empowered Consumer movement at www.ec360.org
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