Shockingly good news; (IMO) It’s about time Green Tree was punished

As a real estate agent who has successfully negotiated many short sales, I eventually had my short list of horrible lenders to deal with. Green Tree Funding was on that list. Funny story; few years back, I was complaining over the phone to Green Tree about how horrible they were, the woman on the other end of the phone told me I was exaggerating, so I walked around my office with her on the phone and took an impromptu survey. Without explaining to my fellow agents who was on the phone, I asked several of them what they thought of negotiating short sales with Green Tree. As near as I can tell, most of them probably figured I was having a conversation with another Realtor, and they all in run either said that they had not dealt with Green Tree at all, or that they hated dealing with them. One agent, Paul, realized asked me (embarrassed) after he answered if that was Green Tree on the phone.

Well they were just formally punished by the CPFB (Consumer Finance Protection Bureau) for (allegedly) “mistreating borrowers attempting to avoid foreclosure on their homes.” The federal agencies announced last week that they will compel Green Tree to pay a total of $63 million – $48 million in “redress to victims” and an additional $15 million civil penalty – for (allegedly) refusing to honor loan modifications on mortgages transferred from other servicers, demanding payment for the provision of loss mitigation options, and charging borrowers “convenience fees” for pay-by-phone services while presenting those payment services as the only option. Later, Green Tree also (allegedly) withdrew from those same accounts for more payments even though the original payment had been presented as a one-time withdrawal. Green Tree also (allegedly) harassed delinquent borrowers with “anywhere from seven to 20 phone calls per day” when they fell as few as two weeks behind in their payments; these calls included threats of wage garnishment and arrest.

The feds have opted to allow Green Tree to refuse to admit wrongdoing in return for paying through the nose. Richard Cordray, CFPB director, clearly believes that this is the right option in light of the huge payday for the government and the victims. “We are holding Green Tree accountable for its unlawful conduct,” he said in a public statement about the settlement. In the meantime, all entities other than Cordray must continue to refer to the alleged misdeeds as just that, alleged, because Green Tree has not admitted or been convicted of bad behavior.

FTC blogger Lesley Fair recently wrote a column praising the settlement, pointing out that the move will encourage other loan servicers to actually service loans rather than “making misleading statements about what people owe, [causing] deceptive delays, and [making] unauthorized withdrawals from [borrowers] accounts.” Since many customer complaints hinge on Green Tree’s refusal to correct “iffy information” in new loan portfolios, the company also has promised to institute a “comprehensive data integrity program” designed to make sure customer accounts hold the right information and are being handled appropriately. I am not as optimistic as Lesley.

Loan modification really makes sense, but don’t do it on your own.

What is loan modification?  In its simplest form, loan modification is when your lender modifies the terms of your loan. They can defer amounts that are past due, change the interest rate, even reduce the principal owed.

The most common element being modified at the moment is taking past due payments and putting them ‘on the end’ of the loan, so that you still owe the money, but your loan is considered current.  This happened with a friend of mine.  She had lost her job, and gotten about 4 months behind in her house payments.  When she got back to work, her bank offered her the opportunity to take the 4 months payments, and defer them, which brought her current.  Many homeowners are doing this kind of modification on their own.

Why are they doing that?  Because they are nice?  Of course not!  It’s a business decision.  They are not in the business of owning real estate, yet they own quite a bit of it and they really don’t want anymore.  So if you make enough money to pay a lower mortgage, they lose less money in the long run.

The next element I have seen modified is the interest rate.  If your interest rate has adjusted (or is going to soon), lenders are helping people stay in their homes by offering a reduced and fixed interest rate. If your rate was 5 1/2, and has spiked to 8 for example, many lenders are bringing that rate down to 5.  Some people I know have been successful at this on their own, by simply calling and asking, but only if they are already behind.

A less common type of modification is to get the amount owed reduced.  This I have only seen done by professional loan modification firms.  Companies that do this for you.

There is an attorney here in Las Vegas, helping homeowners (and there are many companies – just check the internet).  He is asking the bank for a principal reduction to 10% below the current value of the property and 4% – 6% interest rates, fixed. In other words, if you currently owe $300,000, and are paying 8%, but your house is only worth $250,000 – after the modification you are only paying 4% – 6% on a principal balance of $225,000. Of course there are many factors involved in your final outcome – not the least of which is that you have to be able to prove that you can afford the new payment, so that the bank is not wasting their time stalling the inevitable.

Here is the best part! He only charges $1,250 and if he can’t modify your loan, you don’t pay!  Oh yeah, did I forget to mention that they do not pull credit? You do not have to have good credit to get the modification.  Sometimes you don’t even have to be behind! (depends on the lender)

Think about it. If he reduces your monthly payment by $200 per month, in 7 months, you are ahead – even if he did not reduce your principal!  If you are interested, let me know.  www.CapeCodAREI.com/contact

What if you just don’t have the $1,250?  Drop me a line, let me see if I can help.  www.CapeCodAREI.com/contact

Bookmark and Share