Category Archives: Loan Modifications

Foreclosures down, yet struggles for loan modifications continue

Foreclosures Down

John Chun only wanted to live the American dream. He escaped from North Korea to South Korea in 1957. He then come to the United States where he learned English and put himself through College. John Chun chose to be an engineer and designed the Shelby Cobra for the Ford Motor Company. He created the most known iconic hotrod street cars in the 1960s.

One day, Chun’s dream had turned into a complete nightmare. At the age of 84, he received a foreclosure notice on he home he had owned since the 1970s. Even with plenty of equity, his dream home was being foreclosed on. With the foreclosures declining and the housing market increasing, the Chuns are fighting in court. Like the other thousands of homeowners around the world, fighting for your home can be a real nightmare. In the state of Minnesota alone, there were 9,565 foreclosures within the first six months of 2012. That was 15 percent lower than the previous year.

For more than thirty years, the Chun family lived peacefully. Even raising two children in that same dream home. With their wealthy living styles, it all came to a halt in 2006 when they refinanced through IndyMac, which is now a branch of One West Bank. The couple was unaware that they had just signed for an adjustable rate. With that being said, their mortgage payments went from $1,750 to $3,000 to $4,000 over the next several months. Before they knew it, they were paying over $5,000 for a monthly mortgage. This was well above their budget. In 2010, they were so far behind in payments. That is when they received their foreclosure notice from IndyMac.

They were offered a loan modification that year through the federal Home Affordable Modification program. They were so excited. They applied immediately. This program was designed to help families who are struggling to avoid foreclosures. However, much to their surprise, they were denied. The bank rejected their application for incomplete documents. So they reapplied. Again, they were rejected with the same reason.

“We do not want to lose our dream home. I am a fighter. I know that no matter what, I will always hang in there.” John Chun stated.

He was later informed by the representative at his bank that every document was completed. Since being denied so many times, he decided to put his dream home on the market. He had hired a local real estate agent. His home was listed for $1.4 million dollars. That was then he was informed that he would recoup at least $265,000 from the equity he had in their home when it sold on the market.

That was when IndyMac gave them another chance to reapply for the modification. Having high hopes, he took his home off the market and applied again. However, during the process, his home was sold at auction. The bank had bought the home back for a little over $685,000. He was heartbroken.

The Chuns are now suing One West in a federal court. The documents stated that the company misrepresented their home loan. John Chun was given false promises that his home could be saved from foreclosure. Thankfully a judge issued a restraining order that would block their eviction process until their lawsuit is completed. Of course in court, the bank denied many of Chuns allegations, including the incomplete documents. The lawyers that represented the bank petitioned for the judge to dismiss the entire case.

That is when Chuns attorney, Todd Murray, stepped in. He stated it was more than what the papers showed. “The issues with this case is that they deserve to be treated with honesty. They were never told the entire truth. Only were given false hopes.” They lost all of their money and the money that was supposed to be recouped from the selling of their home. Banks should be held accountable for their actions. Banks should not be able to give false hopes to homeowners regarding the modification process.

The problem that happened to the Chuns happen to people everyday. It is called a dual-track foreclosure. This is when banks process the foreclosure and the modification application at the same time. This resulting in the foreclosure to process faster. In the end, your home will be foreclosed quicker than the company actually allowing you to pay on your defaulted loan. However, there are new laws surfacing. With the Obama administration, there are now new rules for all mortgage companies to follow by.

As John Chun currently battles stomach cancer to this day, he is awaiting trial. If the judge decides to take his case to federal court, he may have a chance to save his long time dream home. However, if he is denied, he will be forced out of his all American dream home. He will only leave with the memories he created.

Congress passes student loan rate extension

Student Loans

College is something that every young adult strives for. But who can afford College these days? If you did not save up every dollar since you were born, then you would have to search for a Student Loan. A Student Loan is the future of money lending. Since you would only be using the funds to pay for school, books, etc. you would not need to borrow a significant amount of money.

Senator Elizabeth Warren was the individual who introduced the Bank on Students Emergency Loan Refinancing Act on 06/04/2014. This bill was to allow students to refinance their current student loan and receive today’s interest rate. In other words, you are acquiring today’s interest rate for a long you borrowed years ago. This bill coincides with the federal loan program which has its own federal loan rates. However, despite all efforts to help student loans, the bill failed. Needless to say, that is when private loan companies starting to become strict with their policies regarding student loans.

Having your student loan through a private company has its advantages as well as disadvantages. As a student with a loan, you know that it can be almost impossible to negotiate reasoning if you are not able to afford the payments. Which leaves many individuals wondering why private companies have such strict rules and regulations. Here are a few examples of why private lending companies have to be strict on student loans:

Retail Credit
Student loans with private lenders are categorized as a retail credit. With that said, federal regulators prohibit programs that allow the lending company to alter the terms of the retail credit loan. With these type of loans, you are only offered a six month repayment plan. That doesn’t seem like a long enough time to repay a loan worth a few thousand dollars. You would have to make double the amount of payments to pay the student loan off in the time frame given.

Ironically, a private lender is only allowed to offer any programs if you have defaulted on your student loan. This means your student loan would be 120 days or more past due. This is the only time you would be offered a differed program. However, it is not wise to allow your student loan to become delinquent. Not only does this how on your credit report but it is also available for all loan lending companies to view. Many companies sell their past due loans to a collection agency. These collection agencies buy the student loans from the original lender. Collection agencies know that they will receive more money than what they purchased your loan for.

More Options
The first thing you should do as a borrower would be to look at your financial situation. What can you take out of your finances that would provide you with extra money? If you have extra money, put it as a down payment towards your student loan. I know this sounds funny but it will lower your overall monthly payments. Also, look for a lower interest rate loan that could be consolidated. Since there are so many consolidated loan programs, you could combine all your debt into one monthly payment.

Even if you do default on your student loan, many collection agencies will have leniency towards your good-faith payments. That is why even if you send in a small amount, you are making an effort to exhaust your debt. These agencies will work out payment plans that can fit around your budget, as long as you pay something.

Getting a student loan can be a very helpful option. It is important to understand all rules and regulations that are involved with your student loan. Before you sign your name on the dotted line, ask as many questions as you can think of. This way there will be no surprises in the end. If you still have questions or concerns regarding student loans, feel free to contact us today. Our staff is always available to answer any questions you may have.