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US Loan Auditors Applauds California Attorney General

Jerry Brown’s Crack Down on Phony Loan Audit Scammers

Scam Artists Request Upfront Fees, Property Title Transfers and Escrowed Mortgage Payments

SACRAMENTO – February 25, 2010 – US Loan Auditors announced today that they are endorsing California Attorney General Jerry Brown’s crack down on “phony loan audits” and “loan modification” scam artists by warning California families that scammers are out to steal their hard earned homes and money.

“It is a shame that people would setup a storefront and call themselves a foreclosure relief agency just to steal from local families,” said Shane Barker, one of the founders of US Loan Auditors. “It is absolutely critical that consumers do their research into the company they are working with and extensively check references before assuming a firm has experts. We have never done, and will never do loan modifications. Our audits are specially designed for attorneys to take right into court.”

US Loan Auditors is not a loan modification firm, but instead is specialized in using the science of forensic loan auditing to help victims of predatory lending, and their legal counsel, uncover violations during the loan documentation or loan origination process. Customers can rest assured that the principals of the firm have extensive mortgage industry experience and the company backs up its expertise by offering a free upfront consultation for their forensic audit services.

“Our audits are not performed with a loan modification in mind,” Barker said. “We do the forensic loan audit to help give homeowners the leverage they need in court, not for a loan modification. Beware of companies promising big results after illegally collecting a large upfront fee.”

Along with a large upfront fee, scam artists may request the transfer of the title of the house to the “rescue” firm; making the mortgage payments to the scammer instead of the lender; and even prey on people that sign paperwork without carefully reading the documents or having an attorney review them.

“Unfortunately, some people are becoming victims twice,” Barker said. “Please be aware of the warning signs of a scam artist and take steps to protect yourself, your home and your family from further risk.”

An estimated 80 percent of the homeowners with one or more of the following; adjustable loans, pick a payment or option ARMs, non speaking or limited English speaking, or stated loan transactions, may have been victims of predatory lending.

www.usloanauditors.com

First, a quick refresher. As reported by Dataquick, Sacramento home prices in December posted a minor 0.42% gain, year over year. For all of 2009, according to the Sacramento Bee, Sacramento home prices slipped 18.46% compared to 2008. For the 4th quarter of 2009, Dataquick does not, unfortunately, release quarterly data for Sacramento metro home prices. However, all indications point to a small price increase- for example, the number of new housing starts has been increasing(housing starts are just a counter for new housing developments). Remember that housing data lags about 60-90 days which is why we are only now getting 4th quarter 2009 home price statistics. As more data comes in about Sacramento home prices we will post it here.

**Update- According to Bloomberg.com, Sacramento home prices fell 37% in 4th quarter 2009.

These positive signs of Sacrameno home prices can be attributed to a few things.

1. The bank. Banks are much more willing to work out deals with in-trouble home owners, whether through a short sale or loan modification.
2. The inventory. Every granted loan modification or approved short sale means one less foreclosure that will hit the market in [probably] terrible condition and at a ‘overbid-me’ list price.
3. The money. Dramatic action by the Fed purchasing trillions of dollars worth of mortgage backed securities has put an artificial lid on rates, leaving them at 4-5.5% all last year.
4. The law. Changes were made to California’s foreclosure process last year, doubling the time courts took to issue a foreclosure. Additionally, bankruptcy judges were granted the unprecedented ability to ‘cram-down’ or modify debtor’s mortgages.

So are we in the clear? We are still bullish on Sacramento home prices and the status of the entire west coast. Here’s the issues facing home prices:

1. The iceburg. Data issued years ago shows a potential new wave of ARM resets from Alt-A loans, hitting right now. The potential for additional foreclosures and inventory is troubling.
2. The money. As mentioned, rates are artificially low. What happens when the Fed removes the lid? Analysts predict sharp jumps in mortgage rates if inflation rises. Additionally, credit score requirements for loans have increased and loan programs continue to be cut back. These changes lower qualifying home prices and remove buyers from the market.
3. The law. There are concerns that the first time homebuyer credit simply advanced demand, or pushed people forward that were planning on buying anyway. Economists are concerned home prices could be a false positive.

This is all speculation of course. And what happens to Sacramento home prices in the area that you live will vary. The real factor is the median price range your home is in. As the lower end has already had massive declines from the peak, if further decreases in home prices happen, there will be some protection. For example, some higher priced/exclusive communities in CA have had very small price declines only.

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We’re your source for Sacramento area Real Estate news, advice, tips and more. Our specialty is mortgage blogging, you’ll get the latest on Government lending (especially FHA) as well as many other types of home loans and even special programs and DPA. We aim to bring you only the most relevant and quality Real Estate info- we try to keep it local to our home area of Sacramento but do cover news across California and the West coast. Some Real Estate news of course is nationwide- so we’re a good source of information no matter where you live.

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• Up front FHA mortgage insurance premium increases from around 1.75% to 2.25%.
• These changes go into effect for Case Numbers created after April 5, 2010 (Though you may have applied for a FHA loan prior to this date, a case number is not always assigned). So at least there is a few months of breathing room.

What does these changes to FHA mean in layman’s terms? As a quick review, FHA loans have two types of mortgage insurance. FHA up front mortgage insurance is calculated as a percentage of the loan amount, and is typically financed a.k.a. added to the loan amount as a one-time event. This is why on FHA loans, though a downpayment was made the total loan amount is higher than the actual loan amount. FHA monthly mortgage insurance is a percentage of the loan amount as well, but it is calculated on an annual basis and collected on a monthly basis with each mortgage payment. The average person may not be aware that FHA mortgage insurance is mandatory on all loans no matter how large the down payment.

Let’s look at an example of the FHA MI changes for 2010.

Prior to April 5, 2010:

Purchase price: $200,000

Down Payment(3.5%):$7,000

New loan $193,000

1.75% FHA up front MI: $3377.50

New total FHA loan: $196377.50

After April 5, 2010:

Purchase price: $200,000

Down Payment(3.5%):$7,000

New loan $193,000

1.75% FHA up front MI: $3377.50

New total FHA loan: $196377.50

Here’s the link to HUD for the Mortgagee letter detailing this new increase in FHA mortgage insurance premiums.

More FHA MIP resources available at FHA.gov (aka HUD.gov)

Our analysis is that these increases in FHA MIP are due to the recent default rate spike in FHA loans- they are scrambling to keep capital up. We’ll cover this in our next post.