Hundreds flock to Mortgage Help Day

Volunteers gather consumer stories at Mortgage Help Day

More than 200 homeowners met this past Saturday with representatives of banks and HUD-certified housing counselors to try and find solutions to their mortgage problems. Housing Counselors and bank reps tried to create work out plans to keep folks from foreclosure. At the same time, advocates provided information about other options available to homeowners facing default and highlighted the need for changes in public policy that will protect Washington homeowners from foreclosure. The meeting, dubbed “Mortgage Help Day,” was organized by Solid Ground’s Statewide Poverty Action Network and a large group of governmental entities and nonprofits. The event was held at South Seattle Community College.

Throughout the day a recurring theme was that the Federal Government’s Home Affordable plan was not working to help homeowners the way it was envisioned.

KOMO News’ coverage showcases some of the challenges homeowners are facing.

The Statewide Poverty Action Network also collected stories from frustrated homeowners to take to the Washington State legislature this coming session in an effort to get legal help for struggling homeowners. Specifically, they are promoting legislation that would create a mandatory mediation process in Washington State. This would give homeowners every opportunity to avoid foreclosure and maximize the ability for loan modifications. In 23 other states and municipalities around the country, this mediation process has helped 60 percent of participants avoid losing their homes.

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Mortgage counselor on KUOW

Solid Ground’s mortgage default counselor, Erin Rearden, appeared on KUOW’s The Conversation yesterday, discussing federal efforts to help folks who are facing foreclosure and talking to homeowners about their specific situations. Lots of good info and perspective. You can listen in here.

Solid Ground’s Statewide Poverty Action Network is co-producing Mortgage Help Day, this Sat. Oct 2 at South Seattle Community College, to give folks an opportunity to meet 1-on-1 with Erin and other counselors as well as representatives of area lenders. Details here.

4 banks participating in Mortgage Help Day, Oct 2

Representatives of four banks are expected to join a dozen nonprofit, HUD-certified housing counselors at Mortgage Help Day this coming Saturday, October 2, to help homeowners facing foreclosure to understand their options and make good decisions.

PosterIf you are worried about making your next house payment, please come.

If you are currently delinquent on your mortgage, please come.

If you have received a foreclosure notice, please come.

We are expecting representatives from Chase, Bank of America, Wells Fargo and PNC. If your mortgage is with one of those lenders and you are facing a rate adjustment or other factors that are making it difficult to make your payments, please bring your loan documents and other important papers to ensure that you can make the most of this opportunity. Counselors from Solid Ground and other HUD-certified housing counseling organizations will also be available to help.

Organizers from the Statewide Poverty Action Network and other partner agencies suggest that you bring along:

  • Photo ID
  • Social Security Card
  • Last 2 years’ W-2 and tax returns
  • Last 2 months’ pay stubs
  • Last 2 months’ bank statements
  • All mortgage documents, including closing documents and statements
  • AND if you have them: layoff notice from employer and/or medical letter from doctor.

Mortgage Help Day is from 10am – 4pm on October 2 at South Seattle Community College’s Brockey Conference Center (6000 16th Ave SW). You can get there on Metro bus lines 125 & 128. Free childcare and translation services can be provided, but please call to arrange them in advance: 206.694.6794.

For more information go to www.povertyaction.org.

What’s up with the legislators supporting banks instead of homeowners?

Several weeks ago the bill SB 6648 was turned down by the Washington State House. This bill would have given homeowners a second chance to avoid foreclosure. Lenders would have been required to participate in a mediation to evaluate if there is an affordable and sustainable means to keeping the home, as opposed to selling the home at an auction sale. Reasonable criteria would have been established and lenders would have been required to implement modifications under the current FDIC programs. Moreover, banks would have been mandated to create a fair and open process that would have benefited both, the lenders and homeowners.

Bank balancing on the rotunda of the Capitol in OlympiaIn other words, homeowners currently in foreclosure and heading into foreclosure sale would have been given a second chance to keep their homes. The lenders, on the other hand, would have been able to get an expedited process to help mitigate their losses in addition to mitigating expenses related to foreclosure which can amount up to $70,000 in fees per foreclosure sale. Banks end up buying these properties and selling them at a discounted price, which translates into more losses for the investor and a trickle down effect on the value of properties around neighborhoods. Continue reading

Short Sale & Deficiency Judgments in Washington State

Short sale is a good option to avoid foreclosure, however if you don’t know what you are getting into, you may end up owing a deficiency judgment unless it is otherwise stipulated in the short sale agreement.

What is short sale: A short sale is a sale of real estate in which the sale proceeds fall short of the balance owed on the property’s loan. Both parties consent to the short sale process, because it allows them to avoid foreclosure, which involves hefty fees for the bank and poorer credit report outcomes for the borrowers. This agreement, however, does not necessarily release the borrower from the obligation to pay the remaining balance of the loan, known as the “deficiency.”

HousesWhat is a deficiency judgment: A deficiency judgment is simply the difference between what the lender is owed and what they are paid back. When a lender is not paid back in full via a short sale, they can go to court and get a court order directing the borrower to pay them back the difference. The lender can then take that judgment and attach it to the borrower’s other properties, if they have any, or garnish the wages of the borrower.

In the State of Washington deficiency judgments are not permitted on non-judicial foreclosure processes, however, if there is no “power of sale” clause present in the original loan documents, the lender can pursue judicial foreclosure. The lender would have to sue the borrower to start a judicial foreclosure and a deficiency judgment can be awarded to the lender if the property is found by the court to have been abandoned for at least six months before the decree of foreclosure. If the “power of sale” clause is present in the original loan documents, the lender can pursue non-judicial foreclosure. This clause authorizes the lender to sell the property in the event the borrower goes into default on the loan.

The non-judicial foreclosure process in Washington State does not allow for the lender to sue the borrower to obtain a deficiency judgment. In real life it’s rare for the lender to foreclose judicially because Washington is a redemption state. Also, if the homeowner doesn’t have equity in the property, and they do not have other assets the lender can go after, they usually don’t attempt to obtain a deficiency judgment. It’s not to say they won’t try, but it is usually to their advantage to just get the house sold with a short sale and write the loss off and move on.

Continue reading

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