Subprime, and the resulting crisis built up, exploded, and ruined the US economy. Risky lending imploded in 2007. Now we see more fallout, as RealtyTrac Inc. said Thursday that the number of U.S. homes taken over by banks jumped 35 percent in the first quarter of 2010 from a year ago. In addition, households facing foreclosure grew 16 percent in the same period and 7 percent from the last three months of 2009.

More homes were taken over by banks and scheduled for a foreclosure sale than in any quarter going back to at least January 2005, when RealtyTrac began reporting the data, the firm said.

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From our Saxon Mortgage watchdog and consumer advocacy website comes this information concerning the HAMP program. The information was submitted by a HAMP applicant who initially was told of missing paperwork. The complaint is frequently heard about mortgage servicers including Saxon Mortgage. Citigroup had similar complaints about missing paperwork.

Here is a detailed report from a Pennsylvania resident. Her opinions are her own:

I’ve contributed to Saxonwatch for almost a year now. It’s given me a place to feel that I wasn’t alone in this horrible fight with Saxon Mortgage. So, when I got the news I felt the need to contribute – as I do, good or bad, so that others can take from it what they will.

After almost 2 years of fighting with Saxon and 6 months in limbo not knowing what was going on, we were notified that our HAMP modification is in its final stages. We should be receiving our documents within the next week.

In a Nutshell:
Saxon has lost or shredded multiple papers we’ve sent. Faxed umpteen times and called more than I can remember. In the end – the fight was worth it. It was my home I was fighting for and I’ll be damned if I was willing to walk away without a good fight.

Advice for others:

• Photocopy everything with your name, address, loan number, and number all documents. Make a copy for your own records – just in case. Because we know that “just in case” always happens with Saxon.

• Keep a log of everything that happens, any errors, messages and issues you come across. You never know when you’re going to need it.

• Get a contact on the inside. This makes things go so much easier. We all know their fax systems are not the best way to do business. See if you can send the documents via email to your inside informant.

• Get an advisor. Many states have free help. I used Neighborhood Housing Services. It’s good to know you have someone on your side to answer your questions truthful and honestly.

• Be prepared for the worst case senario. It might happen. Have a fall back plan ready.

• Have faith that what your fighting for is worth it. People have died for centuries in order to obtain their little corner of this earth. Most cases – with nothing on it. This is your home and it’s worth fighting for. Be prepared to fight a hard fight. Find strength from somewhere and know your efforts aren’t for nothing.

• In all honesty – Saxon isn’t a good company. They take advantage of those who are down and manipulate things to benefit them. But it takes people like me, you and this site to fight back for the rights of the people. Never surrender your rights.

Good Luck

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Most people fail to realize that by prolonging their problem, they are much further from a real solution.

With a short sale of the home the bank often tries to recoup the additional monies through a promissory note. If you have little chance of raising the monies to pay back the note, perhaps you should consider giving the home back to the bank or investor and declaring bankruptcy.

Delaying the obvious, or spending every dime now, only to declare bankruptcy later, might seem honorable right now, but one should consider the real facts. Owing $30,000 or more on a home you no longer own really hurts. If the bank demands payment in full, or garnishes your wages, bankruptcy again becomes an alternative.

If a cram-down of the mortgage could not be had the only relief for the borrower is bankruptcy. The sooner the borrower takes the bankruptcy solution, the sooner the borrower can start to re-build their credit.

If the bank simply issues a 1099-C but does not pursue collection action, it might be difficult to pay your taxes but the IRS might work with you. I have never known any lending institution to simply let a borrower walk away from money owed. Some demand a promissory note, where others will issue a 1099-C, leaving you responsible for taxes on the difference.

Either way, the bank is the loser. However, if the bank recoups no money and forces you into bankruptcy, the bank is a bigger loser.

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Foreclosure filings were reported on 341,180 properties in March, a 17 percent increase from the previous month and a 46 percent increase from March 2008. The March and Q1 2009 totals were the highest monthly and quarterly totals since RealtyTrac began issuing its report in January 2005 despite a decrease in bank repossessions (REOs), which were down 13 percent from the fourth quarter of 2008 and 3 percent from February totals.

“In the month of March we saw a record level of foreclosure activity — the number of households that received a foreclosure filing was more than 12 percent higher than the next highest month on record. Since much of this activity was in new foreclosure actions, it suggests that many lenders and servicers were holding off on executing foreclosures due to industry moratoria and legislative delays,” said James J. Saccacio, chief executive officer of RealtyTrac.

“It’s also likely that the drop in REO activity can be attributed to these processing delays, rather than to any of the foreclosure prevention programs currently in place. It’s very likely that we’ll see the number of REOs increase again now that most of the moratoria have been lifted.”

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Today we see another press release from Hope Now, with another initiative. Bank baiolouts, implosion, and stock market news makes one point perfectly clear. Even President Barrack Obama is shunned by some shady lenders. Obama is ignored by shady mortgage servicers. No matter how hard Hope Now actually tries, investors block every attempt to actually help homeowners.

Servicer members participating in the Reach Out campaign include American Home Mortgage, Bank of America, Carrington Financial, Countrywide Financial, HomEq Servicing, HSBC, Litton Loan Servicing, Ocwen Financial Corporation, Saxon Mortgage Service, Select Portfolio Servicing, SunTrust, Wells Fargo and Wilshire.

Ocwen seems to actually have a plan. Other do not. Hope Now does not actually see results. For Saxon results are iffy at best judging by complaints about restructures, modifications, and new loans. See complaints on Saxon Watch for examples.

Homeowners are outraged by HSBC, which shut down the same predatory lenders – HFC and Beneficial – that people are supposed to call when asking for help. The doors are closed. Nobody is home. See HSBC complaints for examples.

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Can you image how it would feel if your mortgage company sent the sheriff to evict you from your home, if you knew you were current and had the paperwork to prove it? One woman can tell you.

The case made the nightly news in Nashville tennessee, and the mortgage servicer was Saxon Mortgage. Unfortunately for Saxon and parent company Morgan Stanley, the story was escalated to national news status after Google News picked up the outrageous story.

The mess up comes one week after Saxon made the news with a self-serving article about how they are hiring ‘up to thirty people’ to keep up with the workload.

Apparently thirty people will not be enough. Here is the TV station report about Saxon and foreclosure of an innocent person.

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There are many people facing foreclosure. The situation is totally unacceptable. The number of older homeowners facing foreclosure, over 700,000 of whom are 50+, means it will be hard to recover in a slowing economy, and the fact that statistics are that high is also totally unacceptable. Imagine working all your life just to see it disappear, regardless of age. Should we be proud of ourselves for stimulating the economy for a while? The country should have strong economic stimulus plans, and should never rely on duping homeowners to release the equity in their homes for economic gains.

With lower credit scores and foreclosure problems, the gap between those with strong FICO scores and those without has increased. Those over 50 are seeing a drop in 401-K retirement programs, but not too long ago the government suggested private investing as a Social Security offset. Thank goodness we dodged that bullet, but we only did so long enough to run into another minefield.

A consensus is emerging that 401(k) plans will not provide an adequate supplement to Social Security to the majority of American workers. Initially Americans thought it was because people did not have the self control to save regularly. Today in a collapsing economy 401 (k) contributions stop when jobs are lost. If your retirement date is still decades away, it’s tempting to tap your 401(k) plan for emergency cash.

Those over 50 know retirement is not that far away, and $635 a month from Social Security is no retirement plan at all.

If you raid your 401 (k) you’ll deplete an asset that’s off-limits to creditors. If you go into foreclosure or file for bankruptcy protection, creditors will go after your assets to repay your debts. But federal law protects your 401(k) from creditors, says Etti Baranoff, associate professor of insurance and finance at Virginia Commonwealth University.

It would be silly to assume that creditors are not attcking this law as we speak. They want your money. On the other hand the government has the responsibility to act in a responsible manner. Regulators must wake up first, which is a problem in itself.

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Now that mortgage rates are low what does it take to refinance your home? A recent analysis by Inside Mortgage Finance found that the average score for borrowers whose loans were sold to Fannie Mae and Freddie Mac was 748 out of a possible 850. Clearly many borrowers with impaired credit will not be able to refinance as lenders are unwilling to part with money to refinance the credit-impaired sector. The problem is a two-pronged issue that often requires borrowers to hurt their credit before a work-out is considered.

Most work-outs result in nothing more than a technical change that puts past due amounts on the back end of the loan. Then the subprime pixie waves the magic wand and the homeowner is current again. The borrowers credit score is lower because lenders will not do anything until the situation demands attention.

Should you willingly harm your credit score to get the attention of your mortgage company? If a workout is needed only to stop the phone calls, with no real solution in mind, then the answer is no. In reality if you are asking the question you must consider whether or not you will lose the home in the future. The real question is not whether you will hurt your credit score, but whether you want to throw money at the problem.

Years ago predatory lenders said people would do anything just to keep their home and their automobile. Today – and this is important – the Fed and major banks say the same thing. What does that tell us about the state of banking? A moot point, but changes in bankruptcy laws to assist homeowners with “cram downs” might alter the old predatory lender thinking.

If homeowners feel the urge the predatory lending theory that borrowers will do anything to keep their homes and cars will no longer apply. People will ask for help one time only, and then they will mail the keys to the lender.

Why would that happen? If the borrower thinks he or she was duped and deceived he or she is already mad. Follow that with lenders who demand that the borrower must miss payments before a work-out is considered, and the borrower may opt for bankruptcy simply to try for a cram down. It is the classic case of selecting the best of the worst options. In the long run there is no loyalty to the lender.

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Today, about 80 percent of the $1.8 trillion in troubled mortgage loans belong to investors, according to Deutsche Bank. The rest are considered “whole loans,” held by banks or government-run mortgage giants Fannie Mae and Freddie Mac. Some people might not feel sorry for the investors, but others think investors were mislead about the safety of such loans. Either way, why are mortgage companies reluctant to help troubled homeowners? The fault lies with investors. It is a simple matter of contract law.

“Mortgage servicers report to trustees, which have fiduciary duties to the investors in (mortgage-backed securities) pools,” said Benjamin Allensworth, the senior legal counsel to the Managed Funds Association, told Frank’s committee. “Similarly, institutional investors holding (mortgage-backed securities) also have fiduciary obligations to their clients.”

While we (taxpayers like us) bail out Wall Street the lawyers are fighting to protect investors. The government, as of today, has done nothing to mitigate the contract law issue, but if they do it will no doubt cost taxpayers more money.

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Announced on November 12th, Citigroup Inc. said it will offer to modify terms on up to $20 billion in mortgages. The program will be extended to borrowers who are making their payments but are in danger of falling behind. It includes subprime borrowers as well as those with good credit who took out prime loans. The program is limited to customers whose mortgage payments equal more than 40 percent of their income.

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