The New York Times has reported on the new Obama administration plan to pay homeowners, lenders, and mortgage servicing companies to effect short sales and walk away from homes to avoid letting them go into foreclosure. The argument is that selling will be better for the lenders than foreclosing, while also helping borrowers' credit ratings.

However, it seems that the government is simply trying a new plan every few months to attempt to pay banks money to get them to reduce the foreclosure rate, without any thought as to how these schemes invite fraud and further distortion of the housing market. It is inconceivable that this latest plan could not turn out to be just as poor as every previous government solution.

The main problem with this plan is that the short sale negotiation process is almost completely controlled by the banks. Although the lenders are "compelled" by government to take a predetermined price for a property, it is the lenders themselves that determine the minimum that they will accept to sell a house short.

The process works like this: the bank contracts real estate agents to estimate the fair market value of a given property. This will determine the minimum price that the bank will accept from a short sale. If the borrowers find a buyer who offers that much or more, the bank must accept it. As well, the bank must give up any rights to sue for a deficiency judgment after foreclosure.

This invites corruption across the country, as the banks will use local real estate agents to determine home values. The question arises, will these be the same real estate agents that helped pump up the housing bubble in the first place in order to increase commissions on sales? Although they did not play the largest role in the bubble, real estate agents did help fuel the buying mania.

Also, it is impossible to get around the issue that estimating the value of a property is completely subjective. Even using comparable sales in an area is simply a subjective estimate based on a handful of other subjective estimates while filtering out other possible relevant subjective estimates. The banks will be using this information to determine the minimum sales price of a property.

The minimum price -- as determined by the banks -- will also be kept a secret from the homeowners, who may have their own valuation done but which may be vastly different than the lender's estimate. This makes it nothing but a guessing game for the homeowners to come to the bank with an acceptable offer.

Furthermore, with the bank determining the value of the property on its own and keeping its estimation secret from the homeowners, it will be nearly impossible for the borrowers to know if the bank has received an acceptable minimum offer or not. What if the bank simply refuses an acceptable offer? The homeowners will simply be led to believe it did not meet the unilaterally-determined minimum.

Unfortunately, this latest plan will probably be as successful as all other previous government plans to stop foreclosures. Namely, it will be promoted as a possible benefit to hundreds of thousands or millions of homeowners, but looking back on it in six months or a year, it will prove to be a bad idea corrupted by fraud from top to bottom, as well as just one more distortion of a market badly in need of less government intervention.

How far is the Obama administration willing to pursue its insane schemes to stop the foreclosure crisis? After one failed plan after another, starting in the Bush administration, the government has been handing out trillions of dollars in an unsuccessful effort to do everything all at once for every category of player in the real estate market.

HUD and the FHA and Fannie Mae and Freddie Mac were designed to help keep home prices affordable for middle class and low income home buyers. The banks and the Federal Reserve, though, pumped up the market full of inflated money and used creative loans and securitization deals to make it all look less risky.

This raised prices in virtually every real estate market in the country as cheap money poured into newly developed and older communities. Home values doubled or tripled in some areas in the space of a few years, as there were more loans with no strings attached being offered to potential buyers than there were properties.

So skyrocketing property values and unsustainable home prices were the design of the Federal Reserve and the banks, but other government programs and bureaucracies were supposed to be maintaining low prices and keeping the real estate market open for lower income borrowers. Reasonable prices for a house, though, was not the tactic so much as fraudulent securities and inflation.

The real estate market was pumped up to historic heights and then, nearly all at once, everyone realized the bad loans the banks made were bad no matter what label the rating agencies were paid by the banks originating the bad loans to stick on them. So the run-up in real estate prices had to end as reality set back in.

It was at this point that the government finally began to realize what its true role in the housing market was all along: protecting and maximizing bank profits regardless of home values and whether average or poor Americans could afford the prices of these properties or not. No expense was spared to keep the banks afloat.

Literally trillions of dollars have been transferred to the banks by now, through one bailout plan after another and through various "windows" and "facilities" of the Federal Reserve. Another few tens of billions of dollars have been thrown at government bureaucrats to pretend to fix the housing crisis and make a few foreclosures go away.

Take as one example the Hope for Homeowners Program, which was allocated $300 billion and had one successfully stopped foreclosure to show for it after months of existence. How many other people could have been saved from losing their homes or their jobs if they had not had to contribute $300 billion to assist one other anonymous borrower?

Then the Obama administration came to power and released its Home Affordable Modification Program, which offered to pay banks for each deed in lieu of foreclosure or mortgage loan modification that it approved for homeowners. Banks took this money when it was in their interests, while taking money from other government sources when it was even more profitable to foreclose.

Now the latest program, taking effect April 5, 2010, will actually pay homeowners to sell their homes for less than what they owe the bank and give them extra money to move out. Previously, homeowners and banks could negotiate for such terms to avoid foreclosure on their own through deed in lieu, short sale, and cash for keys deals.

Homeowners can actually go into foreclosure and sell their homes short and walk away with thousands of dollars in welfare "relocation assistance" from the government, while the servicing company and mortgage lenders receive their own corporate welfare after being compelled to accept a short sale offer that has been previously determined.

Why all these complicated plans? By now, the government could have paid off every single mortgage and credit card in the country without creating any more moral hazard on the part of the banks or borrowers than it already has by paying people in foreclosure and lenders.

Oh wait. That's right. The government's role is not about representing people and protecting against fraud. The government's only role now is guaranteeing and increasing bank profits, so naturally it would rather distribute inflated money to the lenders as part of "programs" and "liquidity injections" than just do the simple thing and pay off every loan in the country.

This should be an argument against any kind of government welfare programs, not an endorsement of the government actually paying off people's loans. But it should also certainly not treat multi-trillion dollar financial institutions as privileged welfare recipients. "Too big to fail" has quickly become "too politically connected not to guarantee record success at any cost."

Will the Bank Accept Less Than The Total Owed?

Maybe, but no homeowner knows in advance how much a bank will accept or even whether it will consider an offer for less than the total amount owed. The best idea is to speak with the bank about getting the principal reduced in a loan modification or allowing the borrowers to pay less than what is owed in order to sell the house in a short sale.

Without calling the bank and beginning the negotiation process, homeowners will never know whether they could have qualified for a way out of foreclosure or not. While many borrowers do not qualify for any solution, they may be successful in gaining more time to stay in the home and save money, but the ones who never even try are guaranteed to lose their properties to foreclosure.

How are Liens on a Home Given Priority?

Liens are given priority in the order that they are filed. Liens for property taxes, however, will be given priority in the case of a foreclosure sale. But after any back taxes are paid, then the lien filed in first in chronological order will be given the highest priority.

Thus, any second mortgage or judgment lien will be paid off in a sheriff sale only after the property taxes and first mortgage are completely paid off. This is one reason why second mortgages come with higher interest rates -- there is an increased possibility that the lien will not be paid off in the event of foreclosure.

What Kind of Tax is a Property Tax?

Property tax is an ad valorum tax. An ad valorum tax is based on the value of the good or service or property. The tax is usually imposed on an annual basis and the property's value may be reappraised periodically (usually every year).

Other types of taxes include excise taxes, such as sales taxes, and income taxes, such as the federal and state withholding taxes on many people's weekly wages. Property taxes, though, are considered ad valorum taxes and are imposed at the county level in many states.

Does Loan Modification Result in a New Deed?

Not usually. Deeds are typically executed when the ownership of a property is transferred and are used to show that the title has been switched from one person's name to another. In a loan modification, ownership does not get transferred in between parties, so there is little reason to prepare a new deed and have it recorded.

In fact, one of the scams that many homeowners have fallen victim to when attempting to stop foreclosure is transferring the title out of their names by executing a quitclaim deed. The scammers then record the quitclaim deed and gain title to the property, which just may lead to foreclosure that much faster.

Should I Write a Letter Requesting a Loan Modification?

This is usually called a hardship letter, and must be included with the application for a loan modification. In general, homeowners should describe what caused them to fall behind in their mortgage payments, whether it was a job loss, medical emergency, or other issues. Also, the borrowers should detail what they did to solve the problem, how they recovered from it, and what they are doing to make sure that they never fall behind again.

Homeowners should use the hardship letter as an opportunity to gain more understanding of their situation and make the best case they can to the bank. If the borrowers have fully recovered, they should state this, and if they have replaced some income but their situation has permanently changed, they should also disclose this to the bank. The more information the bank has that may not be explainable anywhere else but the hardship letter, the better.

Should I Use a Template to Write the Hardship Letter?

While there are templates and forms that can be found online and in various software programs to help homeowners write a hardship letter, the best idea may be to discard these aids and write the letter themselves. The hardship letter is the borrowers' opportunity to explain what happened to cause them to fall behind, what they did to fix the situation, and why they are not expected to miss any payments in the future. This could be done more effectively with hard work and reflection, rather than plugging a few details into a template.

Over the next few weeks, we will be working on a new version of the ForeclosureFish website. There will be vast new sections covering loan modification programs, settlement of other debts besides the mortgage, personal finance issues, and the uses and importance of consulting with a bankruptcy attorney to have a final backup against losing a property. We are looking forward to bringing you this new information and giving you the latest most effective tools to understand and fight foreclosure.

Can I Do Loan Modification on My Own

Homeowners can successfully negotiate a loan modification on their own, although it is somewhat more uncommon than hiring a lawyer or private company and obtaining one.

With a decent amount of time to call the lender and sit on hold and fill out documents that the bank will require for the modification, borrowers can negotiate directly. In many cases, it is simply a matter of calling the lender and requesting the documents to get started in the process.

In cases of a more complicated nature, such as those involving predatory lending or mistakes made in the origination of the loan, the bank may be more interested in covering up the wrongdoing and taking the home to foreclosure anyway. It is in these cases where having competent legal counsel can be more beneficial for debtors.

Does Loan Modification Hurt?

Physically, a loan modification should not cause any damage or injury to any human or animal. It is simply a method that homeowners can use to negotiate with their bank for a change of the terms of their home loan. This may include lowering the interest rate or extending the term of the loan, for instance.

In terms of the borrowers' credit score, a loan modification can not impact this. As of November 1, 2009, all loans modified under the government programs must include the following notice on the borrower's credit record:

"loan modified under a federal government plan"

As well, the government has made it mandatory that the credit reporting agencies do not count this note on an account as a negative which will decrease the borrower's credit score.

However, potential creditors do look at the entire credit history of the debtors, and seeing a loan modification may make them less willing to extend credit. This is dependent on the individual financial institution's lending policies and guidelines.

Does Loan Modification Work in a Chapter 13 Bankruptcy?

A Chapter 13 bankruptcy puts the entire debt collection process on hold to give the filers time to work out a court-approved repayment plan for a portion of their debts.

Thus, because the process is on hold, a loan modification can not be enacted while a mortgage is currently under the supervision of the Chapter 13 trustee.

However, it is possible to negotiate a modification of a loan with the mortgage lender during the bankruptcy. But it will be necessary to have the bankruptcy case voluntarily dismissed before the modification can be finalized and put into effect. Banks may not be willing to negotiate with the borrowers under the circumstances of a Chapter 13, though.

How Long Does the Mortgage Modification Process Take?

The time it takes to finalize a loan modification depends on a number of issues, from how long the mortgage servicing company takes to how quickly the homeowners can get their paperwork in order.

The first is how long it takes the homeowners to get back on their feet financially and be able to afford any type of monthly mortgage payment. The bank will not modify a loan that can not be paid even at a lower monthly rate.

It also takes time to contact the bank and discuss what options are available, and get the application for the modification. This might take days to sit on hold and then get the fax from the bank.

Homeowners then need to spend time obtaining financial documents such as bank statements and tax returns, and send this and other relevant information to the lender.

If a servicing company is involved, it will have to send the loan modification application to the actual owners of the loan who have authority to approve or deny the modification.

If the modification is approved, it can go into effect within a period of weeks to a month after the borrowers are informed of the approval.

The entire process can take from a few weeks to six months for some homeowners. Those working with private companies, housing counselors, or attorneys may be able to negotiate an agreement more quickly than debtors working on their own.

What is a Mortgage Modification Loan?

A loan modification isn't a loan. It's not termed a "loan modification loan" -- it's just called a "loan modification."

It works by allowing homeowners and their lenders to negotiate to change the terms of a mortgage, usually to make the payments lower and more affordable to help the borrowers avoid losing the house to foreclosure.

There are a number of ways that borrowers and banks can negotiate for different terms. This list is not exhaustive:

• Lower the interest rate.
• Change an adjustable rate mortgage that may increase in a number of months to a fixed rate mortgage with more stable payments.
• Decrease the amount owed on the principal balance of the loan.
• Take any missed payments and, instead of requiring they be paid now, add them to the back end of the loan.
• Extend the term of a loan from 15 years to 30 years, or from 30 years to 40 years in order to lower the monthly payment.

The original mortgage is not replaced with a new one as in a refinance, but changes are made to the functioning of the current loan.

In the half of a foot stack of documents that homeowners receive at the closing are all of the agreements that the bank will use to hang them if they fall behind on the monthly payments. But where and how does all that paperwork obligate the borrowers to become homeless persons if they can not pay back money created out of thin air?

The homeowners and lender sign a contract using a Mortgage or Deed of Trust to create a security interest in the real estate. The parties also sign an agreement in the Note that the borrowers must pay back a certain amount of money or the bank can enforce its security agreement.

The security agreement, also known as the Mortgage or Deed of Trust allows the lender, in the event of a default on the note, to claim a breach of contract and use the state's legal process to have the property sold at a public auction, also referred to as a sheriff sale or trustee sale, to pay off the amount still owed to the mortgage company.

State foreclosure laws and court procedures dictate how the foreclosure process must be conducted by all parties involved.

Of course, in most cases, the lender does not obey the laws or follow the guidelines set by the state and local court, but none of that matters. The homeowners, experiencing a financial hardship, can not pay to defend their home from being taken from them, and are often derided or dismissed if they attempt to do so on their own.

In general, if there is any surplus of funds from a public foreclosure auction, it goes to the homeowners.

This is why banks keep raising fees, interests, charges, costs, and any other monetary items they can impose on an account.

The bank wants to be able to collect as much money as possible from the sheriff sale of the home.

Not surprisingly, a surplus that goes to the homeowners is very rare. Most homes do not sell for enough to pay off even the first mortgage, let alone any other liens or create a surplus.

However, in the rare cases where there is a surplus, the homeowners often have to request it from the court or county clerk. They will not just be sent a check.

The government would rather that the homeowners disappear and leave the surplus for the government itself to claim, instead of letting the borrowers know they are entitled to some funds as a result of the sale.

How Can Your Employer Find Out About Your Foreclosure?

A homeowner's work can find out about a foreclosure that the worker is going through in any of the following ways. The employer checks the borrower's credit history for some reason and finds out that the mortgage loan is in a state of foreclosure. Work pulls public records on the piece of real estate that the employee owns and finds the foreclosure lawsuit or lis pendens affecting the title. The company does a background check on its employee and the foreclosure litigation shows up as a civil lawsuit. The foreclosed house is listed for public auction in the paper and a coworker or the boss reads about it.

What are Some Tips to Avoid Loan Modification Frauds?

Loan modification scams often operate by charging homeowners thousands of dollars out of pocket to negotiate an agreement with the bank. But instead of working out a modification, the company simply steals the money, does no work for the borrowers, and refuses to provide any sort of refund when their lack of effort becomes apparent and the homeowners are still stuck in foreclosure.

Many states have now made it illegal or more difficult for these types of companies to take money up front before any services have been provided to the borrowers. In some states, a successful mortgage loan modification or other agreement, including a forbearance or repayment plan, must be negotiated successfully with the lender before the company can take any money from the homeowners.

The best way to avoid such scams is to keep on top of the laws in regards to foreclosure service providers in the state in which the property is located. As well, homeowners should do research and discover the company's online reputation, Better Business Bureau record of previous complaints, and any complaints filed through state or federal regulatory agencies.

What Does the Bank Have to Do to Notify You of Foreclosure?

This depends on the state and the type of foreclosure used, and local differences can be very different than the two generalized descriptions listed here.

However, that said, in general, there are two different types of foreclosure processes that homeowners will experience in the vast majority of cases. (Other types of foreclosure are allowed in some states, but are very limited.)

In judicial foreclosure, banks are required to bring a lawsuit against the homeowners in the local district court. Homeowners are notified of the foreclosure when they are served with the paperwork including the lawsuit complaint the lender has filed. Notification is often done by a sheriff's deputy hand delivering the paperwork or by the bank sending the paperwork via certified mail.

In nonjudicial foreclosure, the bank is able to sell the home at auction without suing the borrowers. Notification is often done by having a sheriff post a Notice of Sale or Notice of Intent to Foreclosure and Sale or similar notice on the property itself. Notices must also be posted in local newspapers, in public gathering places, or at the county courthouse.

The specifics vary by state, but these are the two most common methods of foreclosing on a home and how the debtors are notified of the pending loss of their property.

The following is a list of the limits, if any, that states have imposed on deficiency judgments after a foreclosure action. Not every state limits the amount of such judgments, while other states do not allow them at all. Any limitations on suing borrowers after foreclosure and related issues can be found by searching the statutes and codes of the state. For more information on various aspects of the foreclosure process, please visit our state foreclosure laws section.

Alabama: Deficiency judgments are possible. No limits.

Alaska: Deficiency judgments are not allowed if the foreclosure is by power of sale (nonjudicial foreclosure).

Arizona: No deficiency judgment on a purchase money mortgage for one- or two-family properties on less than two and a half acres. A deficiency may be allowed if a court decides the owners committed waste.

Arkansas: Lawsuit for deficiency must be brought within one year from the date of the public sale. Deficiency limited to amount of indebtedness less fair market value; or deficiency limited to amount of indebtedness less sales price of home.

California: No deficiency allowed under judicial foreclosure unless there is no redemption period, and no deficiencies are allowed under nonjudicial foreclosure. Deficiencies that are allowed are limited by fair market value of property.

Colorado: Deficiency is allowed, but homeowners may claim the house sold for less than the fair market value as a defense against this.

Connecticut: Deficiencies are allowed if they are pursued within thirty days of the end of the redemption period.

Delaware: Deficiency judgment allowed if lawsuit filed on note. Not allowed in judicial foreclosure proceedings.

District of Columbia: Deficiency judgments are allowed. If one is sought under judicial foreclosure proceedings, it may be entered in the foreclosure lawsuit.

Florida: Homeowners entitled to jury trial in deficiency case. Bank must have in-hand service on borrowers to include deficiency action in the foreclosure lawsuit.

Georgia: Sale will not be confirmed unless court is satisfied the sales price was for the true market value of the house. No deficiency is allowed unless the bank makes a request to the court and the sale is confirmed.

Hawaii: Allowed in some types of foreclosure, not allowed in others.

Idaho: Lawsuit for deficiency must be brought within 3 months of the public auction. Deficiency limited by fair market value as of the date of the sale.

Illinois: Deficiency judgments are allowed.

Indiana: If there is an agreement and an applicable waiting period is not waived, a deficiency judgment may be obtained.

Iowa: Deficiency not allowed if nonjudicial foreclosure process is used. Otherwise, deficiencies may be limited by statute.

Kansas: Deficiencies are allowed, but the court can refuse to allow confirmation of the sale or set an upset price.

Kentucky: Deficiency allowed if homeowners fail to answer foreclosure lawsuit or if they are served with the paperwork in-hand.

Louisiana: Deficiency only allowed in ordinary proceeding or executory proceeding if property has had an appraisal done under the state regulations.

Maine: Deficiencies are limited to an amount set on the date of the sale. If the bank that owns the mortgage is the high bidder at auction, any deficiency is also limited to the fair market value of the property.

Maryland: Report of sale and audit are required, but a deficiency can be obtained by filing a motion in court after the sale has been conducted.

Massachusetts: If a deficiency is to be pursued, the bank must include a notice of intent to seek deficiency with the required Notice of Sale. This Notice of Sale must be served on the borrowers at least 21 days prior to the actual auction.

Michigan: If the mortgagee bank purchases the property at auction, homeowners may use as a defense that the sale price was for less than the fair market value of the property.

Minnesota: Deficiency allowed, but limited by fair market value determined through a jury trial. If nonjudicial foreclosure is used and the six-month redemption period is available, no deficiency is allowed.

Mississippi: Judgment allowed if suit filed within one year of the auction. If the mortgagee bank was the winner at auction, deficiency may be denied based on unreasonably low sales price.

Missouri: Deficiency judgments allowed.

Montana: Allowed on a purchase money mortgage only under judicial foreclosure procedures.

Nebraska: Suit must be brought within 3 months of auction date. A deficiency is limited to the lessor of the difference between the amount owed to the bank and the fair market value at the time of the sale, or the difference between the amount owed and the sales price at auction.

Nevada: Allowed, but limited to the lessor of the following: the difference between the debt and the fair market value; or the difference between the debt and the sales price at auction, including interest from the date of sale.

New Hampshire: Allowed if action is brought in court after sale.

New Jersey: Judgment allowed only on the note after foreclosure, but no personal deficiency judgment allowed. Deficiency is limited by the fair market value of the property, and action must be brought into court within 3 months of sale.

New Mexico: Allowed in judicial foreclosure, but property can not be sold for less than 2/3 of its appraised value. In nonjudicial foreclosure, creditor can sue for deficiency within 6 years of sale, unless property was occupied by a low-income household.

New York: Deficiencies limited by fair market value of property, and are only allowed if homeowner was served in-hand or appeared for lawsuit.

North Carolina: May be limited by fair market value in judicial cases. No deficiency allowed in nonjudicial foreclosure of purchase money mortgage.

North Dakota: Deficiencies limited by fair market value or appraised value, but allowed on land of more than 40 acres. Not allowed on residential property of four or fewer units on less 40 acres.

Ohio: Allowed but void after two years after sale date. The property can not be sold for less than 2/3 of its appraised market value.

Oklahoma: Limited by fair market value as of auction date. Objections may be filed to confirmation of sale.

Oregon: Deficiency judgments not allowed on judicial foreclosure proceedings involving residential mortgages, or in nonjudicial foreclosures.

Pennsylvania: Allowed if a separate action is filed in court after auction. If the mortgagee purchases the property at auction, any deficiency is limited by the fair market value.

Rhode Island: Deficiency judgments are allowed.

South Carolina: Homeowners may request court to issue an order of appraisal within 30 days of the auction. If this is done, deficiency is limited by the amount of the debt over the appraised value.

South Dakota: If mortgagee or holder of note purchases the property at auction, any deficiency is limited by the market value. In judicial foreclosure proceedings, a deficiency judgment may be barred. In cases of voluntary foreclosure, no deficiency or surplus is allowed.

Tennessee: Deficiency judgments are allowed.

Texas: Action to pursue a deficiency must be brought into court within two years of auction date. If the borrowers ask the court to determine the fair market value, the deficiency may be limited or offset if the market value is greater than the price obtained at auction.

Utah: Action to pursue deficiency judgment must be made within three months of the sale date. Any judgment is limited to difference between the debt owed, including fees and charges on the account, and the fair market value

Vermont: In judicial foreclosure proceedings, the lender must request deficiency in original complaint and will be limited to the fair market value if the mortgagee is the winner at auction. In strict foreclosure proceedings, a separate judgment must be obtained and is limited by the fair market value.

Virginia: Deficiency judgments are allowed.

Washington: Deficiency judgments are allowed in judicial foreclosure proceedings, but not if nonjudicial foreclosure is pursued.

West Virginia: Deficiency judgments are not allowed if the sales price is less than the amount of the indebtedness.

Wisconsin: Deficiency judgments are allowed if included in the foreclosure action, but court must be satisfied that the house sold for its fair market value. If a lender waives its right to deficiency, the redemption period is shortened.

Wyoming: Deficiency judgments are allowed if the homeowner is obligated by a separate written agreement.

For references to specific state statutes, please email us which state you are requesting information for, and we will be able to point you to the relevant sections of that state's code. It should also be noted that states change their laws frequently, and foreclosure laws are no exception. Thus, it is still important for homeowners to do their own research to determine the current laws affecting their property. This list should only be used as a guide.

For years now, the foreclosure crisis has been getting worse and worse. From the first indications that something was wrong in the subprime mortgage market in 2007, to the collapse of investment firms and the entire banking system in 2008, to the long recession of 2009 accompanied by failed bailout and economic stimulus plans, the economic outlook has looked more bleak by the day for average Americans.

And while everyone has wanted to hold people accountable for the mistakes that were made and the blatant defrauding of the American people, only one person, and a minor player in the crisis, has had any kind of trial or been sent to jail: Bernie Madoff. Everyone else who participated in the impoverishing of the country has gotten away with it, and some of the major firms and people have actually been rewarded for their malevolence.

Even though no one has truly been held accountable, there has been a lot of blame passed around. Nearly every party imaginable has been blamed in one way or another for causing the financial crisis, with the government both castigating the offending party and then bailing out that same group with taxpayer money.

At first, it was the homeowners facing foreclosure themselves who were blamed. They took out too much money, they failed to read and understand simple concepts like adjustable rate mortgages, they were just deadbeats who took advantage of the banks and caused the real estate bubble to burst by not paying their mortgages. Thus, the government stepped in and created half a dozen programs to save homeowners from foreclosure and falling home values.

Then the banks were blamed. They had given poor loans to poor people who would never be able to pay them back. They bought into the myth that real estate prices could rise 20% a year and people would be able to afford these new artificially inflated prices forever. When that turned out obviously not to be the case, numerous lenders collapsed and banks were taken over by the FDIC. In return, Congress and the Federal Reserve gave trillions of dollars to the largest surviving banks.

Car companies have also shared in the blame after facing collapse in the wake of declining sales. By manufacturing low-quality vehicles and overpaying executives and union employees, the American auto companies were almost forced to go out of business or drastically re-engineer their failing business models. Thankfully, the government stepped in to hand over billions of dollars to prop up the failed business models and attempted to destroy the used car market via the overspending Cash for Clunkers program.

Bonuses for bankers has also been an ongoing theme. Congress handed out hundreds of billions of dollars to the banks with no strings attached, while the Federal Reserve made it hugely profitable for banks to borrow money from the government at 0% interest and re-loan it back to the government and receive actual interest back. Thus, the banks were able to generate billions of dollars in revenue without interacting with the public to discover actual lending opportunities. And now, politicians are falling all over themselves to denounce bonuses that they facilitated and a large portion of which will return to them anyway as corrupt campaign contributions.

Is there anyone else the government can blame to shift attention away from the fact that it has been in charge of the housing market and the banking system for decades? HUD, the FHA, Fannie and Freddie have all been involved in sustaining the real estate bubble and subsidizing home buyers. Federal Reserve policies made it easier for banks to make bad mortgage loans with no consequences, and have now made it easy for banks to make money borrowing from and lending to the government.

Even the government's programs to solve the foreclosure crisis have been an exercise in shifting blame. Banks are being given every incentive not to work with borrowers to obtain loan modifications or other solutions to foreclosure. Yet, when the programs to encourage modifications fail, the government blames the banks for not being receptive to homeowners' concerns, or label every private company attempting to provide assistance as a scam.

One of the most damaging consequences of the economic collapse has been that the government has bred a culture of blame and distrust among Americans. These are people who would otherwise be working together to solve the problem of high foreclosure rates in their own communities. But now, every homeowner who faces foreclosure is to be looked on as having contributed to the collapse, rather than being a result and victim of it. And the government keeps touting illogical relief programs while providing incentives to the banks not to help the public in any way.

The following is a basic introduction to how disputes are litigated in the the courtroom. Homeowners facing the loss of their home by foreclosure may benefit from knowing the basics of the process before attempting to save their homes on their own or consult with legal counsel. If the borrowers decide to hire an attorney, being aware of how the court case will proceed can provide much-needed peace of mind and help the owners keep on top of the process of preventing a sheriff sale.

The first step is to answer the summons. Once the bank hires its local law firm, the attorneys will get to work creating the foreclosure lawsuit. Then, the paperwork is filed with the county court, with a copy of the suit being served on the homeowners, who are summoned to court to answer the allegations. If they do not file an answer or appear in court, the bank will win the case by default.

The answer to the lawsuit should contain as many of the following elements as are relevant to the borrowers' situation. The most important point is to deny any and all of the allegations that the lender makes in its lawsuit, as well as demanding strict proof of the claims raised by the bank. Then, general defenses should be included. General defenses are claims that the bank should be aware of, including any offsets. Affirmative defenses then follow, which include claims of the homeowners that the bank may not be aware of, such as an expired statute of limitations or unclean hands. Also, the homeowners can then include counterclaims against the bank, which may include violations of the Fair Debt Collection Practices Act or Fair Credit Reporting Act, for instance. Finally, the borrowers may wish to include a request to the court that they are given a period of time to prepare for the next stage, discovery.

Discovery is the process where the plaintiff (the bank) and the defendant (the homeowners) may attempt to get information from each other that will help them in their case. This can include interrogatories, taking depositions, and having the other side produce documents. The first reason for discovery is to examine the case that the bank may present against the homeowners; the second reason is to better define the disputes between the two parties and find out if there are any issues on which each side agrees. When the bank and the borrowers both agree on a fact, their agreement is called a stipulation and may be included in legal filings with the court.

Again, homeowners should examine this brief description here and decide which discovery procedures to use against the bank. Proposing admissions means asking the bank to stipulate a fact. Obviously, if the bank is asking the homeowners to stipulate that they owe a certain amount of money and deserve to lose their home, the owners can refuse to agree. Thus, borrowers may not want to agree to any of the bank's stipulations, while proposing their own to the bank. Interrogatories are questions that are designed to get specific statements of fact from the bank, and it is important to word these carefully and not allow the bank to wiggle away from making important admissions or object to how they are put.

Demanding the production of documents is a procedure used in discovery that can be extremely important for homeowners in produce the note defenses. These requests can be as broad as the homeowners want, as the bank may have pages of relevant documents that can be produced. Even such items as internal emails, notes on a borrower's mortgage account, and bank procedures can be requested.

After serving discovery documents on the bank, the borrowers may need to file any sort of motions with the court. Filing motions is basically a request that the court do something for the homeowners in order to move the case along. The main point to remember here is that the owners should include a copy of an executed motion that the court would use with the homeowner's own motion. This gives the court an easy way to sign off on a pre-made order that the homeowners want done if their motion is granted.

Some of the more common types of motions include the following. A Motion and Order to Compel forces the bank the produce documents that have been requested but have not yet been produced. If the lender ignores the discovery demands, the borrowers can file a Motion and Order to Compel. If the bank continues to ignore the borrowers, a Motion and Order to Preclude can be filed, which would exclude any evidence from trial that could have been revealed in discovery. Obviously, this can destroy the entire case the bank has prepared. Finally, a Motion for Summary Judgment may be used if there are no issues of law or fact that are being disputed. It is used when one side simply requests that the court issue a judgment against another side; this is very common when banks attempt to ignore all of the homeowners' claims and file a Motion for Summary Judgment to circumvent the court process and move straight to the sale of the home.

To conclude this overview, when a bank has its attorneys file a motion, the homeowners may have their own attorneys file an opposition to the bank's claims and state the reason why the motion should not be allowed. All of this may seem to be both a gross oversimplification of the court process, as well as completely over the head of many average homeowners. However, having a basic understanding of how the courts work can help borrowers to defend their homes more effectively than if they did not take the time to learn this important foreclosure information.

This edition of the important foreclosure and personal finance-related facts that are occasionally discussed on this blog will focus on the banking system and writing, cashing, and honoring of checks used by consumers to make payments. Banks must follow specific rules and guidelines if they fail to honor a check that is presented to them for payment, including what can be done if the account on which the check is drawn has insufficient funds.

A bank's refusal to honor a check is governed by the Uniform Commercial Code. Section 4-402 has to do with banks which wrongfully fail to honor a good check that is properly payable. In essence, banks are required to make payments on checks that are properly payable, and any refusal to do so is a violation of the code which makes the bank liable to the consumer. In some of these cases, courts have even awarded the consumers with damages for mental suffering and loss of reputation when a good check was refused by a bank.

In general, banks refuse to honor checks when there are not sufficient funds in the account. This should not be a surprise to anyone with any experience of the banking system. Banks are also not required to cash checks that are over six months old, although many will do so for customers. But a check that is over six months old is referred to as a stale check by the banking system.

Consumers who fail to properly present a check to a bank and are refused payment is another somewhat common phenomenon in the banking world. For example, if a person who a check was made out to goes to the original bank to cash the check but is not a customer of that bank, the policies may require the consumer to present identification or provide fingerprints before being able to cash the check. If the presenter of the check does not comply with these requests, the bank may refuse to honor the check. However, this does not count as a wrongful failure to honor, in most instances.

Many consumers now have bank accounts which offer some sort of overdraft protection. This is basically a pre-approved line of credit that the bank extends to the customer in order to meet any short-term needs that may come about as a result of an overdraft. The check does not bounce, even though the account does not have sufficient funds in order to honor the full amount of the check. In return for this extension of funds, the bank most often imposes an immediate fee on the account, which the customer must pay back.

In cases where a banking customer has overdraft protection on his or her account, a check is presented to the bank which does not have sufficient funds to cover, and the bank refuses to honor the check, there is a clear case of the wrongful dishonor of the payment. Overdraft protection that the consumer agrees to put on his account and agrees to pay the fees for will create the liability on the part of the bank to honor payment of the bad check and impose the charge, rather than just not accept the check.

Finally, banks are now required by federal regulations to disclose to their customers if they have been charged overdraft fees. These disclosure must be made on the periodic statements (usually monthly for most banking consumers) that financial institutions send, and include any overdraft and returned check fees that have been charged to the account. This change or reporting for the banks went into effect January 1, 2010.

Especially for homeowners facing financial trouble from numerous fronts, knowing they have a stable bank that will properly honor their checks is vital. When a bank improperly dishonors payment of a check, it can cause the customers extra money in fees imposed by the bank and the merchant that attempted to cash the check. In the case of paying a mortgage to stay out of foreclosure, for instance, this can be a huge setback for the consumers.

Although this blog has long been a proponent of homeowners defending their properties on their own, realizing that many foreclosure victims do not have the extra money to hire an attorney, this is definitely not a one size fits all solution. While a number of books and other resources are available that teach borrowers how to save their homes on their own, there are a number of reasons at least to consult with an attorney when attempting to stop a bank from continuing with foreclosure.

The first reason that borrowers should consider hiring a lawyer to help them stop foreclosure is simply that the banks will have an army of attorneys pursuing the lawsuit or trustee sale. Many times, these bank-hired lawyers will not take calls from the borrowers, but would be willing to communicate with another attorney that is representing the residents. They speak the same language and know that they can make the process very time-consuming and difficult for each other.

Second, if homeowners are attempting to save their home by fighting a lawsuit in court, it can pay to have an attorney look over the legal documents to search for mistakes. Even if the borrowers do not retain the attorney to represent them, they may benefit by having a local lawyer familiar with the court rules examine the paperwork and process to ensure that is being done correctly. More than one homeowner has had their case thrown out of court due to failing to follow the rules of procedure.

Another reason to consider hiring an attorney is simply insurance against a corrupted system, especially a corrupted judge. In cases where debtors represent themselves, the judge and bank's attorneys may ignore the borrowers while continuing the foreclosure process despite any claims that may be raised against it. If a lawyer on the homeowner's side is present to object to this corruption, it may be far less likely to occur.

While it can cost a significant amount of money to hire a good attorney to help in a foreclosure case, it can greatly benefit the homeowners. It may cost a few thousand dollars to get legal representation, but it can also drag out the foreclosure process over several additional months. This can help keep borrowers in their homes and help them save even more money while the lawsuit is being worked out or another solution is negotiated.

Many homeowners that have negotiated a permanent loan modification have also done so by hiring an attorney to help them get through the bank's initial defenses. While it is very possible to negotiate a good modification on one's own, hiring a lawyer just in case can also make a huge difference. Borrowers often end up with a temporary modification when they work on their own, but can get a permanent plan by retaining a lawyer to negotiate with the lender for them.

Unfortunately, for many homeowners, hiring an attorney may just not be a good solution at all, despite the benefits of doing so. The main sticking point is often the cost of hiring legal representation, and many lawyers may not be willing to take on a foreclosure case where it is clear that the residents of the property are behind on their monthly bills. Fighting a bank in a complicated predatory lending case is also often a losing battle. But for those who can afford to hire a lawyer, it can help.

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While most of the focus of foreclosure scam operations undertaken by state attorneys general and regulatory agencies is on those companies that outright steal homes from people, there is a more common form of ripping off homeowners. Many companies specializing in dubious foreclosure help programs that take advantage of homeowners often do so by stealing hundreds or thousands of dollars straight out of their bank accounts.

There are a number of ways that this can be done, from taking money out of a credit card or debit card to presenting false checks to the bank. One method that is becoming increasingly common, though, is when a foreclosure scam is given pre-authorization to debit a customer's account, but then takes out more money than was originally agreed upon, or continues to take out money after the initial transaction, as on a monthly payment plan.

These types of schemes often come about when a company is willing to listen to the foreclosure victims, often them aid and gain their trust, and then proceed with getting a payment to begin the process of negotiating with the lender for a loan modification, short sale, or other solution. The homeowners are too quick to trust the company and will give their bank account and bank routing numbers over the phone, to be used by the scam to take out the authorized amount of money.

Unfortunately, it can be very easy for the scam to get hold of the bank account, routing number, and all other required information to make the draft. There is software available for free online, for instance, that allows anyone to print out a perfectly good check just by knowing this information. The signature is not an issue, as any consumer can authorize an agent to sign a check for them, or the bank is able to print on the check that it is "authorized by drawer" or through other similar language.

In examining the complaints of dozens of homeowners who have helped bring down various foreclosure scam companies that take money up front from consumers, this issue of overdrafting an account or making repeated charges is common. The fraudulent company may make an agreement with the customer for a $2,000 total fee, to be paid in installments of a few hundred dollars a month. But once it has the banking information, it attempts to take out the full amount.

Alternatively, the fraudsters may be given authorization to take out a certain amount of money one time, even if the agreement is to be an ongoing one. Once the consumers receive their next month's bank statements, though, they notice the bank has made another charge -- this one completely unauthorized -- using the same information that was given in the prior month. It may just keep presenting one draft after another until the borrowers close the account for good.

While it can be easy to find these mistakes and frauds, it can also be very difficult to fight them and get the money back to the original party. Some companies even use legitimate third-party payment processors to make their schemes look legitimate for as long as possible. And it is often their word against the homeowners' word. The banks have already allowed the transaction to go through, so they can be difficult to persuade to assist. Often, filing a complaint is the only option for many.

If customers are going to challenge an unauthorized draft (and they should), they must do so within a reasonable period of time after receiving their monthly account statement from the bank. The consumers will have to fight the charge on the grounds that the scam company was not given authorization to debit the account. Of course, this can present a challenge in that a charge usually was authorized, and the company had the bank account information of the consumer.

The main problem is often that the consumers will have to acknowledge to the bank that they did give authorization for some type of charge, just not for the amount that was debited or for that number of months that the activity went on. Because the bank will often be the party that bears the loss, it will be reluctant just to credit back the amount taken, and may just tell their customers to work it out with the company that took the money.

Obviously, homeowners need to be careful when working with a company to help them stop foreclosure on their homes. They should know exactly who they are working with and what they are paying for, and retain copies of all agreements to make payments to the company. If it turns out to be a scam, the borrowers may have a difficult time getting their money back, which proves the saying that an ounce of prevention is worth a pound of cure.

So you have contacted MERS or the mortgage servicing company and found out which lender owns your mortgage. Then, you sent a rescission notice to the bank using the three-year extended period that you had under the Truth in Lending Act to rescind your loan. But now, the hard part begins. What do homeowners do when they are rescinding a loan – how do they make good with the bank, pay off what needs to be paid, and lower the amount needed for the process to go through successfully?

After rescinding a loan, the lender is supposed to void the security instrument – the mortgage or deed of trust on the home. In turn, homeowners are required to give back to the lender the real proceeds of the loan transaction. This consists of the entire principal balance of the mortgage. Interest, closing costs, and finance charges are not included and do not need to be paid to the lender. Any payments already made to the bank are subtracted from the amount the borrowers need to tender to rescind.

In many cases, if the homeowners do not have the cash on hand to pay back the mortgage, they will have to give back the home or may have to fight with the lender in court. Courts have even found that they can make the voiding of the mortgage or deed of trust conditional on the borrowers' ability to tender the amount necessary to pay off the principal balance of the loan. In effect, they postpone rescission until the lender has been paid.

Thus, in a court battle, homeowners should be prepared to assert every claim they and their attorneys feel comfortable with. This is done to minimize the amount that must be paid to the bank in order to rescind the loan by winning claims against the bank that will lower the total owed. Especially important to raise are any claims that statutes or rules allow for damages that must be paid to the homeowners or credited against the loan, such as Fair Debt Collection Practices Act claims.

While courts can condition rescission upon the paying off of the loan, they can also help set up conditions in favor of the homeowners. The banks will be asking for circumstances to work in its favor; homeowners can do the same to make their situation easier. For instance, the tender amount can be made in payments through a court-mandated payment plan. The bank can even be made to modify the existing loan so it is restructured and will be paid off over the remaining life of the original loan.

The homeowners should be aware, however, that courts will look more favorably on debtors who have acted responsibly against predatory lenders. If the borrowers have acted just as irresponsibly as the bank, the court may not be willing to use its authority to modify the loan to make tendering the rescission amount easier. This is why making as strong a case as possible arguing the case of predatory lending and related claims is so important.

However, paying off the total amount of the loan is sometimes not in the best interests of the homeowners. In these cases, it may be wise to consider filing Chapter 13 bankruptcy and establishing a repayment plan through the courts. The borrowers may be able to pay a certain amount every month through the bankruptcy and then make a lump sum payment at the end of the plan to pay off the rest of the loan. This is often done through refinancing at this point.

But bankruptcy can also be used by homeowners to make the home loan unsecured. While discharging the entire loan through a Chapter 7 is unlikely, paying only a percentage of the loan through a Chapter 13 may be more reasonable. The mortgage company receives the same percentage as all of the borrower's other creditors, and at the end of the payment period, the rest of the mortgage is discharged by the courts.

Happy Presidents' Day 2010!

From,
ForeclosureFish

When homeowners attempt to rescind a loan under their Truth in Lending Act (TILA) rights, one problem that may occur is confusion where to send the rescission notice. Few original lenders hold onto their loans anymore, and many notes may have been transferred from one holder to another over the years, as the securitization of mortgages was a common practice during the real estate boom. This can make it difficult for borrowers to fight foreclosure in time.

This is not just a problem with the lenders attempting to prove in court that they own certain mortgages. Homeowners who are able to rescind their loan under the three-year extended period granted by the Truth in Lending Act are required to send a notice of their decision to the holder of the note. But if the holder is hiding under various security agreements or is unable to be found because the transfers were never recorded, what are homeowners supposed to do?

Another problem that homeowners may encounter is that the company they send their payments to is often just a mortgage servicer, which is different than the actual owner of the loan. Also, if transfer of ownership of the loan is administered by the Mortgage Electronic Registration System (MERS), it will be even more difficult to penetrate that company's secrecy in order to find out the true holder of the note to send a rescission notice.

Thankfully, one recent new rule makes it somewhat easier for debtors to keep track of the transferring of their loan. Any loans that are or have been transferred after May 20, 2009, require that notice be sent to the borrowers. The notice must be sent within 30 days of the transfer or sale of the note and must include such information as the new creditor's name, address, phone number, and how to reach a party with authorization to act on behalf of this new owner.

However, this new rule does not apply to loans transferred before May 20, 2009, which may include a large portion of mortgages. Once the housing market started to melt down, the buyers of securitized mortgages stopped purchasing. With fewer purchases, fewer mortgages were transferred from one entity to another. The drying up of mortgage securitization and the subprime debacle showed the world why transferring ownership of mortgages was not such a great idea.

The main factor working against homeowners in other cases, though, is time. If they do fall under TILA's three-year extended right of rescission, every day will count. For instance, borrowers who attempt to find out their loan holder by sending a Qualified Written Request to the mortgage servicing company may have to wait up to 60 days before getting a response. The law allows servicers up to this long to respond to a QWR.

In most instances, homeowners should attempt to find out which company owns their loan. But, due to servicer incompetence and the fact that no holder may be found at all, the law does provide borrowers with another tactic. Under the Truth in Lending Act, debtors can send notice just to the original creditor to rescind the entire mortgage transaction. Homeowners should send the notice of rescission to the creditor listed on the original paperwork, as well as all other companies with a connection to the transaction.

This blog will be taking a break today as your industrious editor and publisher gets his wisdom teeth removed.

Although it is not widely used, and despite the fact that lenders will vigorously fight against it, rescission of a mortgage under the Truth in Lending Act is one of the most powerful tactics homeowners may use to stop a foreclosure action. It immediately puts the foreclosure process on hold and forces the bank to respond properly to the rescission notice.

In cases of a foreclosure, a loan that is a non-purchase money loan on a principal dwelling can be rescinded. This includes home equity lines of credit, second mortgages, refinanced first mortgages, and home improvement loans. The law covers a wide range of homeowners who may have these types of loans affecting their properties.

Usually, homeowners have a right to rescind their loan that lasts for three days after the closing. However, this time period can be extended up to three years if the bank fails to give the borrowers the proper notice requirements of their right to rescind. Also, if the lender fails to make certain material disclosures, the right to rescind is extended.

One way that banks have attempted to get around this law is by having homeowners sign a waiver of their right to rescind. This involves signing a statement that the three-day period has already expired and the borrowers have decided not to rescind the loan. However, in reality, the three-day period has not passed yet and the waiver is simply a falsehood.

Thankfully, the courts have decided that this type of rescission waiver is not valid and may even automatically trigger the extended right of three years. This may happen at a closing in which the homeowners are asked to sign a waiver on the same document as the notice of the right to rescind. Borrowers may also be asked to post date the signature three days in the future.

Any homeowner closing on a new loan should be aware of their right to rescind, as well as the difficulty in waiving that right before the three-day period has expired. If the bank includes a waiver that is signed after the three-day period actually has expired, that is one issue. But it is not valid to waive the right at the closing or sometime before the actual end of the period.

Other courts, though, have decided cases more in favor of the banks than homeowners, even in cases of an improper notice of right to rescind. Due to amendments in the Truth in Lending Act that were enacted in 1995, some courts have held that the intention of the changes were to make it so that the law was interpreted even more in favor of creditors.

With an improper notice of the right to rescind a mortgage loan, homeowners may have a few events working in their favor. The first is the Federal Reserve's confusing definition of a business day. Homeowners have three business days to rescind their loan, but many may be surprised to find out that the Saturdays count under the Truth in Lending Act as business days.

Second, if the lender disburses funds for the loan before the three-day period has ended, the homeowners may be able to make the argument that even the mortgage company was unclear about the deadline to rescind. Banks usually do not fund a loan after closing until the rescission right has expired, so the funding of a loan before the period has ended shows confusion on the part of the bank.

Thus, if there is a Saturday or a holiday during the three-day rescission period, or the bank funds the loan before the period has expired, an improper notice may not be ignored by the courts that have decided cases in favor of the banks. In these cases, it can more easily be shown the confusion of the rescission period due to the odd calculation of business day and the bank's premature funding.

Because the financial meltdown turned into a huge recession with massive unemployment, the banks have been making record profits. But the record bailouts and bonuses are certainly not enough, and the lenders have begun to make changes in the way that they deal with car buyers and dealerships in order to boost profits even further.

Bailouts of the banks and the auto companies went together, although the banks took more taxpayer money by several orders of magnitude than the car manufacturers. Dealerships around the country have been shut down as the economy has sunk, despite the government's subsidizing of car buying and car destruction through the "Cash for Clunkers" program.

In the aftermath of the program, car buying came crashing back down to reality. Without government to subsidize car buyers, many people stopped buying them after the Cash for Clunkers program ended. The program was always a plan to hand over a few billion more dollars to the banks as people took out more loans for vehicles.

But now, lenders have begun to insert themselves more directly into the car buying transaction through the use of add-on sales and costs. As dealers have been starved for credit to offer borrowers, lenders have begun to get in on this action, especially because add-on costs can more easily be hidden from consumers and offer greater profit opportunities.

In the past, banks set an upper limit regarding how much money they would finance for add-ons. But these were add-on costs that were imposed by the dealers and car companies. With banks not getting into the add-on business, they are more willing to increase the amount that people can borrow to pay for these expenses.

In fact, some lenders have begun offering dealers more money if the dealer includes an add-on that is offered by the lender instead of a third-party. In the case of GAP insurance, for example, a bank may offer to finance $700 of their plan, while only offering $500 to finance a competitor's plan. For the bank and the dealer, it makes more sense to include the $700 policy.

Another issue may involve a bank refusing to finance a competitor's plan at all. Whether or not it is less expensive than the bank's plan or is better for the consumer or not, the lender may not be willing to finance the competitor's add-on at all. Thus, car buyers must be careful that they are not being forced to overpay for a service.

Finally, banks may go even further and require that their add-ons be included by the dealership, or else they will not finance the purchase at all. This is the most extreme way that banks have begun to include extra profits for themselves in car purchases, and buyers should be careful to watch out for evidence of such deals between the sellers and finance companies.

With all of the new involvement by banks in the add-on business, the deals themselves may expose the lenders to more liability under various laws. Truth in Lending laws will come into play if the add-on is required as a condition of financing, for example, and state UDAP statutes may prohibit creditors from such requirements.

As always, when it comes to the banks, buyers should be careful to make sure they are not being taken advantage of in any less-than-obvious way. With banks attempting to get a piece of the add-on action, it may be better for the majority of car buyers to purchase used cars from private sellers or pay for a vehicle with cash. Can we trust the banks to deal fairly in a car buying transaction?

As the failure of the government's latest and greatest plan to solve the housing crisis becomes more apparent, we should all pause for a moment to ask ourselves: what was the point of the program to offer loan modifications to foreclosure victims?

The Treasury Secretary, in an interview with Jake Tapper, addressed the fact that only 66,000 permanent modifications have been extended to borrowers. This is despite the fact that the Obama administration initially estimated three to four million homeowners modifying their mortgages.

Seventy-five billion dollars was set aside through this program to assist over three million homeowners facing foreclosure, yet less than 70,000 have actually received any help. At this rate, it will take the program over 20 years to reach its goal.

But what if the goal was not to provide loan modification assistance to millions of borrowers? If the objective of the plan was merely to create some optimism in the mortgage markets, then it was just a $75 billion public relations scheme.

However, if propaganda with the intent of propping up the housing market was the intent, it was still a hugely expensive advertising campaign. Pretending that the housing market was doing better than it was in reality was the job of economists for many years -- not the government.

Is it more conceivable that the main objective of the government's program was to continue paying off Wall Street and other political interests? If this is the case, the failure of the modifications becomes much more of a "success" the government can claim.

Seventy-five billion dollars for 66,000 mortgage modifications means that each modification could have cost the taxpayers over $1 million. Of course, spending millions of dollars to help homeowners with hundred thousand dollar mortgages is not what the government has done.

So where is all the rest of the money? Tens of billions were appropriated to help millions of people stop foreclosure. After a year, there have been very few modifications given. So has the money been spent? Handed out in corrupt deals? Or is it just sitting somewhere?

If the money is just sitting in a bank account somewhere, maybe it is time to return it to the people and fire the bureaucrats who have thus far failed to implement this government plan to save homes from foreclosure. After all the previous failures, why was this one expected to succeed?

Although the government can intervene in the housing market and temporarily prop up prices and provide incentives to banks to offer modifications, this does not help the housing market in the long term. Once the programs are stopped, what happens then? Prices begin to fall again.

And the government programs can not last forever. Already, the Federal Housing Administration is seeing increases in the default rate of mortgages extended through its plans. Once the government can no longer offer subsidized mortgages to poor credit risks, the housing market will have to decline to adjust for the smaller number of people able to buy.

Strategic default is another concern affecting homeowners. As prices continue to decline, foreclosures increase, and neighborhoods get poorer, more people will be willing to walk away from their mortgages just to escape.

In the end, we have to ask the government, is it really worth spending tens of billions of taxpayer dollars just to propagandize them about the housing market, lying to them about the availability of loan modifications and their ability to qualify for such plans? Especially when most homeowners can just look around their communities for evidence contradicting the false optimism of the bureaucrats?

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What Ever Happened to That Obama Mortgage Modification Plan?

Some people believe that refinancing is a worthwhile solution when they are trying to avoid foreclosure. This is generally a wise idea, if there is equity in your home and if you refinance before your credit is hurt from the missed payments. The problem is that many homeowners do not land into this category. Most foreclosure victims have very poor credit and no equity. This means that the majority of people facing foreclosure and wasting valuable time trying to find a foreclosure loan.

A better fix is a loan modification with your current lender. This is when the terms of your existing mortgage are altered to produce a lower monthly payment. In essence, it is just like a refinance, but your credit and equity are not a major determining factor, like a refinance. In most cases, the interest rate is lowered and the term of the loan is re-amortized to a 30 year fixed rate. In some cases, the principal loan amount is even lowered to reach the target payment.

In some cases, simply asking your financial institution for a loan modification will work. But more often than not, you will need to hire a professional negotiator to work on your behalf. When you hire a professional, make sure you do not pay cash up front, or if you do, it is placed into an escrow account until the process is complete. If you do not get results, you should not have to pay for their efforts! Do your research and be careful not to get taken advantage of. New laws are in place to protect borrowers, but criminals will always be ready to steal your money if you allow them.

When negotiating with your financial institution, you will have to complete a loss mitigation package when attempting your loan modification. This will help them ascertain your qualifications. This is where a professional will come in handy, since getting rejected can be final. It is important to submit a package that is thorough and can be approved the first time around. You may be asked to show proof of income, as you did when you obtained the original loan. Whether or not things have changed with your personal finances is one of the things that the lenders will look at.

If the value of your home has decreased and you are upside down in your loan, then you need to decide if keeping your property is even the best decision. As I said earlier, you may qualify for a loan modification with a principal reduction, but selling the home may be your best bet. When you are upside down in your mortgage, a short sale can be an easy way out. A short sale is when the property is sold for less than the payoff amount and the bank forgives the difference.

Short sales can be tricky however, because your lender will not easily agree to this solution and may pursue a deficiency judgment after the home is sold. It is very important to get your agreement in writing and to make sure they waive their right to pursue this deficiency judgment at a later date. We never recommend homeowners attempting a short sale on their own. Professional short sale negotiators or real estate agents specializing in this type of sale are available at little or no charge to the homeowner, so take advantage and make sure your rights are protected.

Regardless of what you decide, it is important to understand that you have choices and allowing the home to go to foreclosure is rarely a good idea. Your credit will be hurt for years to come and buying a new home will be very difficult until you have recuperated. Do not be afraid to ask for help or retain a professional to help you through these rough times.

Much better than any blog I could write today. This is important information for all homeowners -- not just ones in Minnesota.

Corrupt lenders, foreclosure attorneys, local judges and law enforcement taking advantage of public funds made available by the federal government in order to increase shadow profits and ensure that homeowners are not aware of their rights under the law.

With dozens of failed banks since the financial markets melted down, the Federal Deposit Insurance Corporation (FDIC) has had its hands full and its resources stretched to the breaking point as it attempts to deal with so many bad assets. For homeowners who had loans originated or held by these failed banks, though, there are additional hurdles when defending against a foreclosure action.

There are two main issues that must be clarified once a bank goes out of business and is taken over by the FDIC. The first is whether or not all of the administrative processes of the FDIC must be exhausted by the homeowners before they can have a court review their claims against the bank. The second is which claims against lender misconduct would even survive the special protections the FDIC enjoys.

In terms of the first issue, statutes govern the administrative claims procedure that homeowners must go through when a bank fails and is taken over by the government. In essence, the FDIC has the right to disallow claims made by homeowners, but the agency must send out a notice advising them of their right to present their claims within a specified amount of time (90 days from the date the notice is published). Then the agency has another 180 days to decide if it will allow the claim or not.

In many circumstance, it would be best for the borrowers to speak with an attorney about this issue, as there is a lot of case law and administrative law that has been decided with regards to the FDIC and bank takeovers. If the homeowners do not file their claims with the agency in the manner specified, they may lose their right to the claim forever. This is even if the claims were previously raised against the failed bank itself in court before being taken over.

The second issue relates to which claims would survive a bank takeover. The FDIC enjoys numerous protections against claims that could have been made against the original lender, current mortgage holder, and servicing company. Homeowners and their attorneys will have to answer a number of questions to determine if and what claims would survive.

These questions are the following. Did the bank actually fail, or was it taken over in some other way by the FDIC? For claims relating to the origination of the loan, did the failed lender own the loan at the time it failed? For claims relating to servicing duties, did the failed institution actually service the loan at the time it was taken over? Is the claim one of the types that survive receivership by the FDIC?

Some of the claims that do survive receivership include the following: fraud in the factum; alleged alteration of documents; failure of consideration; rescission rights under the Truth in Lending Act; breach of fiduciary duty; breach of contract; wrongful acceleration and unreasonable sale at foreclosure. There are a number of other claims that would also survive the FDIC taking over a bank.

Obviously, defending against foreclosure can become incredibly complicated when the federal government takes over a bank. Although possible, it is probably not realistic for homeowners to take on the legal defense of the home on their own. Even more administrative and case law comes into play with the FDIC taking over a bank, and it is potentially best to hire an attorney in these situations.

One step of the loan modification or refinancing process that homeowners always mess up is the hardship letter. Every lender that is thinking about giving the debtors an option to avoid the foreclosure process will request a detailed letter documenting what first caused the delay of monthly payments, as well as what steps have been taken to fix the problem.

Many homeowners, though, write very quick hardship letters that explain almost nothing about what occurred, what has been done to remedy the situation, and why the financial crisis was only temporary in nature. In reading dozens of such letters over the years, it seems that many borrowers do not understand what to include when writing the lender.

The most vital part of the letter is the description of what happened to cause the crisis. This should be as specific as possible, because financial institutions will want to make sure that it was an actual hardship that caused the homeowners to become delinquent in payments. Something like a layoff or huge medical expense will be given more credibility than a sick cat or broken TV that was repaired.

It is also necessary that homeowners include dates and time frames during which portions of the hardship were experienced. Banks do not want vague descriptions of losing a job and then finding one. They want to know what month the hardship happened, then what was done in the meantime while payments were being omitted, then when exactly a new job was begun.

Finally, homeowners should include a specific call to action that they want their bank to take. Whether it is modifying a mortgage or accepting a short sale, unless the bank is aware of exactly what the borrowers want, they may not know what to do with the workout documents. Being clear about their intentions with the property is the best way for owners to communicate with mortgage companies.

The hardship letter is a necessary piece of the package of paperwork that mortgage companies require before dealing with foreclosure victims. Debtors should take the opportunity to account for what happened to cause them to become delinquent in as much detail as they can. This is their time to explain that they are not bad clients and deserve another chance to hold onto their house.

With the huge unemployment and under-employment rates in the United States, more people are seeking ways to escape from the debt trap without the threat of being sued and pursued for years down the line. But when it comes to dealing with creditors and collection agencies, borrowers should take a series of steps so they are sure of having the best chance to defend their assets and avoid harassment and intimidation.

During times of positive economic growth, whether caused by inflation and cheap money or real production, borrowing money to finance expenses may seem to make some financial sense. But when a bubble caused by government stimulus and manipulation in the market then bursts, debtors realize that they will not be able to pay back their loans as agreed.

In the past, filing bankruptcy was stigmatized, viewed by one's family and community as a sign that a person had done something wrong by borrowing money and not paying it back. Borrowers would do everything they could, including entering into repayment agreements with their banks, in order to pay off their debts, even if not for the full amount at the original interest rate. But they tried to make good on their agreements taking into consideration their new financial circumstances.

However, with the government subsidization of corporate bankruptcies, this view is changing. More homeowners facing foreclosure and credit card borrowers see default and bankruptcy as business decisions. And there is little reason that people see to pay back any portion of their debts. After all, the banks have been transferred more than enough to pay off every mortgage and credit card in America.

Unfortunately, tens of trillions of dollars in transferred money as a result of blackmailing Congress has not been enough for the financial industry. They also expect borrowers to pay back one hundred cents on the dollar for every single one of their car, credit card, student, and home loans. Borrowers, on the other hand, are looking for ways to fight back.

The first step that any debtor should take is to learn as much as they can about how creditors go about taking a home back through foreclosure or charging off and then attempting to collect a credit card debt. There are a number of websites, forums, and e-books explaining these processes, as well as common defenses.

The next step is for borrowers to get an idea of how common violations of the laws governing collection of debts may apply to their situations. They may have to do some basic legal research, post questions on online forums for further information, or call and speak with someone from their state's consumer protection and attorney general offices.

This should give the debtors a fairly good idea of which laws apply to the situation, what the banks have done to break the laws, possible penalties, and whether they need to start their own lawsuit against the collectors or defend against an ongoing lawsuit.

A final step in the beginning of this whole process is consulting with an attorney who specializes in helping consumers fight back against banks and other financial institutions. Consumer protection lawyers may know the federal debt collection and credit laws, while real estate attorneys may have experience defending a foreclosure in court.

The reasons to consult with an attorney are numerous. First, attorneys will know how to file the paperwork in the most efficient manner possible. A debtor's arguments -- even if they are valid -- can be thrown out of court if the paperwork was not filed correctly. Second, the banks have their own attorneys, so borrowers should have the same advantage in the legal system. Finally, a good attorney will be able to eliminate weaknesses and highlight more strengths in the case, making it more likely the debtors will win or at least be given a fair shot at defending their assets.

Thus, for borrowers who are unemployed or underemployed and worried about their debts, there are at least three steps they should consider taking. First, learn about the laws and how banks and collectors routinely violate them. Second, apply this knowledge to the current situation. Finally, consult with an attorney to ensure the case is as efficient and solid as possible.

There was a story this week on Bloomberg News regarding homeowners in foreclosure and banks pursuing deficiency judgments are a sheriff sale. According to the article, lenders have nearly doubled the amounts that they are recovering from homeowners who have defaulted on first mortgages and home equity loans.

However, this trend is reversing directions now. Banks are beginning to pursue more deficiency judgments against former homeowners. The tens of trillions of dollars printed up by the Federal Reserve and the hundreds of billions transferred directly from the Congress to the banks were obviously not enough. Banks also expect borrowers to pay back their loans in full.

For the past decade, at least, deficiency judgments have been somewhat rare. All things considered, what is the bank's financial motive for going after borrowers who have lost jobs or run into six-figure medical expenses without having health insurance? Most banks realized that homeowners fell behind due to a lack of assets they could use to pay the mortgage.

The lack of assets owned by homeowners combined with the skyrocketing appreciation of real estate to make pursuing homeowners after a foreclosure fairly pointless. The lenders could simply buy back the homes at the public auction, list them for sale on the open market, and make a huge profit flipping the house in a matter of days or weeks.

There has also been a concerted effort by the media and financial commentators to make homeowners feel that they have a "moral obligation" to pay their debts. If the mortal obligation line does not work, then threats of being sued by lenders even after foreclosure is used to intimidate borrowers.

The article also does not put the amount collected from deficiency judgments in any sort of perspective. While it states that over $1 billion in first mortgages and close to $400 million in home equity loans were recovered, it does not compare this with the total size of the US mortgage market, which is estimated to be over $10 trillion. Collecting $1.5 billion of a $10 trillion market is still such a small number as to be nearly not worth mentioning.

Furthermore, are banks really going after more homeowners who have lost their homes due to job loss or other financial emergencies? This is not likely, as these borrowers will be without any assets. It is more likely that banks are going after wealthier individuals who bought multiple homes on credit and are simply walking away from their properties in order to preserve their assets. Investors and speculators have more to fear from a deficiency judgment than individuals defaulting on their only homes.

Finally, it is still important that homeowners keep in mind two aspects of deficiency judgments that work in their favor. First, they are usually limited to the difference between the current fair market value of the home and the sale price at auction, without taking into account the original balance of the loan or the judgment. With the huge decrease in home values, deficiency judgments will be much smaller than they would have been if default had occurred at the top of the market.

Second, deficiency judgments are entirely dischargeable as unsecured debts in a Chapter 7 bankruptcy filing. So even if homeowners do get sued after foreclosure, they may be able to get rid of the debt by filing Chapter 7. And with a huge debt of tens of thousands of dollars, it becomes easier to qualify for discharge, as the debt can easily outnumber the value of the borrowers' assets.

Thus, even if deficiency judgments have doubled or increased even more dramatically since the housing bubble collapse, they were only awarded by courts in a tiny percentage of cases. Recoveries still take up fractions of a percent of the entire mortgage market, and debtors who lost their homes due to lack of financial resources still have little to fear from a deficiency judgment.

Several articles on this site have examined the corporate and legal status of the company known as MERS. MERS stands for the Mortgage Electronic Registration System, and is a private company that allows its members to transfer ownership of securitized mortgages from one company to another without recording those transfers.

Although this secretive company is not often in the news, it has been receiving more scrutiny with the collapse of the housing market and the huge increase in securitized mortgages. MERS is listed on the title and other paperwork of many home loans, and with more of them in foreclosure than ever, the legal status of the company is being challenged more often.

There are a number of problems with some of the rights that MERS claims it has, as well as the benefits it supposedly allows its members to enjoy. The company administers a nationwide database of mortgage loans that tracks the transfer of ownership of these loans. MERS is listed as the nominee in public records, while the actual owner of the mortgage is kept secret.

In fact, the actual owner of the loan is kept so secret that only members of the Mortgage Electronic Registration System have access to this information. Everyone else, from county recorders to the press to the homeowners facing foreclosure, are not allowed to know which company currently has ownership of a loan. This causes some huge problems with MERS and the law.

For instance, because MERS conceals the owner of a loan, and the owner of the mortgage may hire a mortgage servicing company to administer the payments, borrowers may find it very difficult to determine which company to request a loan modification from. The real holder of the note is kept completely secret from the homeowners.

Also, if the homeowners wish to send a rescission notice under their Truth in Lending Act rights, they must send it to the owner of the loan. If they are unable to find this out due to the MERS system of transferring ownership of mortgages without recording such transfers and keeping information concealed from borrowers, the homeowners' rights are infringed upon.

While mortgage servicers are required to inform borrowers which company owns their loan, this requires a request from the homeowners. Answering the request can also cause weeks or months of delay that cost the homeowners even more money if they are behind on their payments and attempting to negotiate a mortgage modification, short sale, or other alternative to foreclosure.

There have been a number of recent court cases that have also effectively challenged the legal rights that MERS claims it has. While an examination of those cases is beyond the scope of this current article, the decisions of courts in Kansas and Arkansas have significantly wounded MERS in both judicial foreclosure and nonjudicial foreclosure states.

For years, MERS has been a constant source of frustration and confusion among both foreclosure victims and their advocates. The company appears on a large number of mortgages throughout the country, and its secrecy has combined with the huge increase in the foreclosure rate to ensure that there is even more disarray in the housing market than there should be. The fact that the company has recently been wounded in its attempts to stay secret and all-powerful is a positive sign for borrowers.

When facing a financial crisis, homeowners often worry about their mortgage company and the credit card companies far more than they worry about their own lives and families. They mistakenly believe that they have a moral obligation to keep paying the mortgage and the credit cards, while living in a home without food, water, electricity, or heat.

One debtor, however, has turned the tables on the creditors and debt collection agencies by finding all of the myriad ways that they violate state and federal laws when attempting to collect debts from borrowers. His story is detailed in the Dallas Observer and makes for extremely interesting reading, and should serve as a lesson for other homeowners.

The story details the case of Craig Cunningham, an unemployed man who owes about $100,000 in debt. Instead of taking the collection agencies' calls, pleading with them not to sue him, or making payment arrangements he will never be able to keep up on, he has turned to a different tactic. He waits for the collectors to violate laws; then he sues them for it.

In many of our other articles, we have detailed how collection agencies, mortgage companies, and banks violate federal laws like the Fair Credit Reporting Act, Fair Debt Collection Practices Act, and state Unfair and Deceptive Acts and Practices laws. Cunningham has taken ideas such as these and used them to keep collectors honest and make the predatory, manipulative ones pay for their illegality.

Numerous laws protect homeowners and credit card borrowers against predatory and aggressive collection attempts. The problem has always been that too few debtors are aware of these laws and how they can be used to reduce a debt or force collectors to pay thousands of dollars in fees to the borrowers.

Obviously, it can be very lucrative and empowering for ordinary homeowners to use these laws against the banks who have preyed on them, made terrible business decisions themselves, taken hundreds of billions of dollars in public money to cover up their fraud and greed, and are expecting debtors to pay back one hundred cents on the dollar of all of these loans.

Some borrowers are realizing that it is just unreasonable to negotiate with creditors that have already been paid off through public funds and are violating state and federal laws in order to aggressively collect even more money from the unemployed.

Obviously, the financial industry has not taken this lightly. After all, they are the banks. Who are ordinary people to sue them for violations of the law? In response, several new companies have been created that list debtors that repeatedly file lawsuits under federal credit and consumer protection laws. According to the banks, these laws are meant to be broken by creditors, not used to keep them accountable by borrowers.

Debt collectors have also taken to labeling and degrading such consumer as "credit terrorists," because, according to the creditors, making banks and collection agencies follow the law and punishing them financially if they do not is a form of terrorism. If close to 100% of one's income does not go to the bank, and if someone takes advantage of the law to get payments due to violations of these same laws, thereby inconveniencing the creditors, it must be bad and evil.

Because of the constant bailing out of the banks, is it any surprise at all that people are defaulting on their debts on purpose? Whether it is called strategic default or credit terrorism, there is an obvious public backlash against the financial industry as people see the creditors given trillions of dollars of the people's money to pay back bad loans, yet creditors believe they should be entitled to having the loans paid back by the people anyway.

Too many borrowers are doubling the banks' money by paying off their loans. Maybe it is time for even more people to stop cowering in fear of the lenders and the courts and start taking the fight to the banks.

Many Americans have fallen behind on their mortgage payments in the last year and are looking for ways to avoid foreclosure. If this sounds familiar, you have more options to choose from than you might have had even two years ago. There are many programs available to assist homeowners in retaining their homes. Using your tax refund to avoid foreclosure may be your best option in the short term. This will help you buy the time you need to help the recovery process. A Forbearance Agreement temporarily lets borrowers pay less than the full amount of the mortgage payment during an agreed upon period of time.

Lends may consider this an option if you can show that funds are coming in from an alternative source. Using your tax refund to avoid foreclosure will often encourage your mortgage holder to work with you. Depending on your individual situation, the forbearance agreement may allow you to go without making any payments for up to a year. If you are not getting a large refund, but can prove the financial issues that caused the non-payments in the first place are behind you, these agreements may also be successful. An example of this is if you missed payments while unemployed.

If you have recently found a new job, your lender may agree to reduce or suspend payments while you get back on your feet. Using your tax refund to avoid foreclosure will help pay them back faster and help you get to work on rebuilding your credit. The important part is to begin working with your lender or a third party organization as soon as you can. If you have missed only one or two payments your options will be different than if you have missed several. A loan modification has also been an option for millions of Americans at risk of foreclosure.

In this process, one or more of the original loan terms are changed. You may have reduced monthly payments due to a change in interest rates or an increased length of the loan. If you are using your tax refund to avoid foreclosure, your lender may agree to lower the payments without increasing the length of the loan. This will greatly depend on your situation. This is also helpful if your lender is willing to set up a repayment plan. With this type of alternative, the lender adds a specific amount to the original monthly requirements, or in the case of a tax refund, one lump sum.

Today’s housing market is in a state of chaos that has not been seen since the great depression. People are losing their homes at an alarming rate to foreclosures, bankruptcy and short sales. Before the extent of the damage was realized, many people thought they could just wait it out. However, this slump has lasted far longer than anticipated. Many homeowners have taken the initiative to call their mortgage holder or have gone online to research their options in an attempt to keep their homes. As a result, technology has helped people recover from foreclosure, as well as aiding millions of homeowners in finding other options.

Not so long ago, a home equity loan was enough to help homeowners lower their monthly mortgage payments and tide them over until their financial situation improved. Unfortunately, many have found that property values have plummeted and they no longer have any equity in their homes. The real estate crisis has given birth to many new programs from both public and private institutions. Technology has helped people recover from foreclosure by making the information readily available. Programs that were once available in a limited area are now options for homeowners nationwide.

Debt relief programs that were at one time considered only applicable for a few have become popular methods for homeowners to reduce their debts. This allows them to make their mortgage payments and save their homes. Organizations that have debt settlement plans and credit card consolidation options are helping people with their debt ratio and reducing the hit on credit reports. Even if the bank has filed the paperwork and proceedings have already started, there are programs available that can help. Technology has helped people recover from foreclosure by making more options readily available to them. However, it has also spawned foreclosure and short sell scams.

Although technology has helped people cover from foreclosure, it has also made thousands of homeowners more vulnerable to this type of scam. The web sites look professional and legitimate, but are designed to help themselves, not the homeowner. Use the Internet to learn about the different type of options available to you, as well as what to avoid. Check the organization’s rating with the Better Business Bureau, research customer feedback on independent sites and compare programs. There are many companies that will help you decide which options are the best for your unique situation. Helping you fight foreclosure and protect your most important investment.

If you have had the same job for many years and have recently found yourself “between jobs,” your resume probably needs to be updated. You may be surprised at how much the focus has changed. It used an accepted practice that your previous employers were listed along with your title and job function. There was one format that was good for everything. In today’s tough job market, resume writing and interview techniques are based as much on the type of job you are interviewing for as they are on experience. It is important to remember the primary function of a resume.

Its goal is to get you an interview. It is a personalized advertisement designed to be interesting and informative. Even if you are faced with significant competition for a job, a well-written resume will get you invited for an interview. Pointing out the features and benefits of hiring you will present you in the best light. This is instrumental in convincing the employer that you have what it takes to be successful in the position being offered. Resume writing and interview techniques should not only be focused around the positions you have held, but how well you performed the duties and what you accomplished.

Have a clearly stated objective. It shows potential employers that you have a sense of direction and goals that you want to achieve. The most common resume formats are chronological and functional. If you plan to stay in your current field, especially if you have been upwardly mobile, the chronological format should be used. If you are changing fields and have skills that are focused on your new industry, a functional resume will show off these skills to their best advantage. For many people, resume writing and interview techniques are more difficult if there are gaps in work experience.

Whether you were between jobs for an extended period of time or if you were a stay at home parent, put it on the resume. It is better than leaving a gap. If you do not have just one focus, you cannot have just one resume. Create a resume for each set of goals rather than have a generic format that does not showcase any. Resume writing and interview techniques have changed somewhat in the past few years. Go online or buy a book to find out the steps that are recommended for your industry or experience level. You could find your dream job as a result.

For most people, defaulting on their mortgage payments is one of their worst fears. This opens the possibility of losing their homes and destroying the credit score they have been working their entire adult lives to improve. The real estate industry is experiencing its most significant decline since the Great Depression and many homeowners are finding that they need to make some difficult decisions. If you are among the thousands of people that have been unable to make your payments, you may need to determine if your home is worth saving from foreclosure. There are several things to take into consideration.

The first of which is the actual value of your home. You may be like many homeowners who are finding that they did not receive an accurate valuation when they last refinanced their homes, which is leading you to determine if your home is worth saving from foreclosure. Inflated appraisals are partly to blame for the current real estate crisis. The appraiser gave the loan officer whatever value was needed to attain a loan. As a result, the loan officer used these prices to value other similar homes in a specific area. This led to the overvaluing of entire communities.

It is only when the homeowners try to refinance that the discrepancy is found. With the decrease in real estate values compounding the issue, you may be faced with the need to determine if your home is worth saving from foreclosure, or if you should just walk away. Unfortunately, there is no accountability on the part of the appraiser or the lending institution. This leaves you, as the homeowner, holding the proverbial bag. The housing market has slowed to a snail's pace. Instead of homes catching up to their appraisal value, they have actually fallen significantly and there seems to be no end in sight, with 2009 being a record year for foreclosures. The more foreclosures in a neighborhood, the further home values decline overall.

This means that the two most common options used to determine if your home is worth saving from foreclosure are no longer available in many cases, selling the home or refinancing with a specialized foreclosure lender. You may not have any equity in the home at all, let alone enough to make up the difference between the mortgage amount and the market valued price. If the home at risk of being foreclosed on is an investment property, you may not have many options. Cutting your losses may be your best bet. However, if the home is your primary residence, the bank may be willing to work with you to help keep your home out of foreclosure and your credit mostly intact.

The decision that many homeowners with a property not worth saving will have to make is between giving up or giving back. Simply giving up on the home and mailing the keys back to the lender, also known as jingle mail, is one option, although not always the best one. Other methods that borrowers can use to give back their home include offering the bank a deed in lieu of foreclosure or negotiating for a cash for keys deal. Either of these options would allow the home to be transferred back to the lender, but with some rewards also being given to the former owners.

Borrowing money to purchase items with credit cards is out. With so many borrowers now in default of their loans and banks closing or reducing credit limits with no warnings, more consumers are turning to alternative arrangements to purchase goods. Credit is out. Layaway programs are becoming more popular.

A layaway program allows consumers and companies to come to an agreement to set aside a certain product while the consumers make regular installment payments. Once the agreed-upon payments have been made in full, the buyers get to take possession of the item, and the seller can not dispose of the good while it is covered under the layaway agreement.

However, there are a number of issues that consumers should be aware of before entering into such an agreement with a company to purchase an item on layaway. For instance, what happens to the payments if the buyers change their mind or default on the installment payments? Or what if the company goes out of business like Circuit City did?

In most cases of the buyer defaulting on the payments, the seller has no right to keep all of the payments made up to that point. If the sale is never completed, the payments may not be retained by the seller unless there have been damages as a result of the agreement being breached. But for most consumer products, this situation must be somewhat uncommon.

The only instance where the seller may sustain such damages are if the buyer never completes the sale and the seller could have sold the item to another customer instead of setting it aside for the layaway plan. In addition, the item can no longer be sold to anyone nor can it be returned to the supplier. This would be a rare occurrence, indeed.

If the seller does decide to retain all of the payments made by the buyers, then a violation of Unfair and Deceptive Acts and Practices statutes has most likely been committed. There are also probably violations under common law regarding contracts. In any event, the buyers are most likely entitled to their payments back.

In the event of a company setting aside an item on layaway, accepting payments, and then filing for bankruptcy protection, the situation can become more complicated. Consumers may be able to assert that the payments made were deposits that were not property of the company and therefore not property of the bankruptcy estate. Instead, they may be considered as belonging to the buyers.

In addition, even if the courts decide that the payments are part of the bankruptcy estate, consumers may be able to recoup all or much of what they have paid the company. The first $2,225 of these payments are given priority as "consumer deposits" and will be paid in full in cases of reorganization. In the case of a liquidation, such layaway payments will be given priority over the unsecured creditors.

As credit remains tight in the consumer lending sector of the economy, more buyers and sellers will come to terms on layaway agreements. While these can facilitate transactions and cut out the creditors, there are also issues that buyers should keep in mind. Especially in the case of an uncompleted agreement or a company filing bankruptcy, a layaway may not be as simple as it sounds.

One in seven mortgages is currently in danger of foreclosure. These are astronomical numbers, especially when you stop to consider that this is all mortgages, not just sub-prime loans. People who have never worried about their financial stability are suddenly in danger of losing their homes. Home values have fallen to such a level that stopping foreclosure is become more difficult. Many homeowners are turning to debt settlement and home loan modification, among other options that can help them save their properties, to prevent foreclosure from becoming an expensive reality.

Banks have several options when a mortgage holder stops making payments. Many have contracted with loan servicing companies that collect the monthly payments and are authorized to charge late fees and proceed with foreclosure if the loan goes into default. However, these companies are usually not authorized to accept a mortgage modification or repayment plan without the approval of the bank or investors that actually own the mortgage. Either the lender or the mortgage servicing company may hire a third-party company to collect the missed payments, or enter into basic repayment arrangements, but any long term changes to the collection of the loan will have to be approved by the investors who own the loan.

Lenders can wait for you to declare bankruptcy and lose all chance of recouping the loan. It is simply written off as uncollectable. However, in many cases, they attempt to repossess the property. This last option is what is known as foreclosure. Due to the sudden increase in defaults on mortgages, foreclosures have been responsible for flooding the market with homes for sale by the banks. They are often sold at a loss, if at all. The challenging economic climate has made it as difficult for people to buy homes as it is for homeowners to be successful in stopping foreclosure.

What most people need to hold onto their homes is some sort of debt relief. With debt settlement plans, homeowners are often able to reduce their required payments by 50% or more. Many creditors are concerned about collecting the debt owed to them and with the increase in bankruptcies being filed across the country, settling is often their best option. This process is also instrumental in stopping foreclosures, as homeowners will have more money to pay their lender. Banks are more willing to make arrangements with their mortgage holders for the same reasons creditors of unsecured debt are willing to settle.

If the debtor has to declare bankruptcy, they may get nothing. A loan modification is the process by which the original mortgage terms are modified by the lender, at the request of the homeowner. The goal is to lower the monthly payments. There are several ways this can be done. Sometimes the term of the loan is extended. In other circumstances, the interest rate is reduced. It is also common for both of these options to be incorporated into one loan modification package. This is has proven to be an effective method of stopping foreclosure, allowing the homeowner to retain their home.

For millions of Americans, 2008 and 2009 were miserable years, and 2010 has not started well at all. The companies they work for had gone through several rounds of layoffs, a significant drop in business, and some have filed for bankruptcy or been taken over by the government or other corporate entities. Not only have merit raises not been given, many people have been offered a pay cut in lieu of being laid off. The sentiment is that, “at least I have a job.” Unfortunately, these jobs often do not pay the bills, or allow for any type of career advancement. It leaves millions wondering how they can find a better paying job in today’s poor employment market. The good news is that it looks like the labor market may be showing signs of life in the future.

The stock market is stabilizing so far, and businesses are seeing an increase in transactions. Salary freezes may come to an end and many of the positions that have been cut over the last few years will need to be filled. As demand for product and consumer confidence improves, new jobs will be created. However, to find a better paying job in today’s poor job market, you will not find the same opportunities in the same areas they were in before the recession. In some cases, an organization may convert part-time positions into full-time or they may opt to pay overtime rather than hire additional staff.

Regardless, job growth will be slow for some years, and pay raises will be few and far between (unless you work in the banking sector). Businesses will test the market and hire a few employees at a time, rather than have a major hiring phase. Experts predict that the health care industry will continue to grow as a result of the aging baby boomers and potential new legislation coming out of the Congress. There are several types of technology jobs and engineering jobs that may be in demand as well. However, if you wait for the market to bounce back before you begin your new job search, you may miss the opportunity to find a better paying job in today’s poor job market.

Not only do you need to be patient, you also need to be proactive in finding your new job. Put your time and effort into the areas that appeal to you. Apply to companies that you are interested in working for, regardless of whether or not they currently have openings. In the worst case, they will keep your resume on file and be able to go through them at the next job opening. Staying in touch will people you know in other industries and organizations can help you find a better paying job in today’s poor job market by networking. The more you can talk about yourself in a meaningful and powerful way, the more memorable you will be. Your perfect job could be just one interview away.

For the first time in their lives, many Americans are finding that they are unable to meet their financial obligations. Bills are beginning to pile up and there seems to be no end in sight to the current economic issues. Many are turning to home loan modifications, credit card consolidation and debt settlement programs to help them keep their homes and reduce their monthly expenses. Although these programs may cause a drop in credit score, there are several financial recovery tips that can help create security and rebuild personal financial stability. This turns the difficulties into a setback rather than financial ruin.

One of the first financial recovery tips most for many financial planners is for their clients to take a long hard look at expenses. Begin tracking everything your money is spent on, from snacks at the vending machine to the large coffee at your favorite cafe. After a few weeks or even a month, take a look at your list and begin reducing or removing unnecessary purchases. This could mean making coffee at home, taking lunch to work, or cutting back on the amount of snack food purchased. For some people, this adds up to hundreds of dollars of savings per month.

Among the most basic financial recovery tips is to create an emergency savings fund. This will help provide a cushion of security. Automatically putting a certain amount of savings away each month, whether it is five percent of each paycheck, or a flat dollar amount will help. Begin to set some short-term and long-term financial goals. Most people find it is easier to start small. Try paying an additional amount on one of the high interest credit card payments you have. This will help pay it down faster, yet will not cause a financial drain. Check your credit score to make sure it is accurate.

Dispute charges and correct errors. This may help improve your score. Depending on the issue, you may need to work with a credit agency for additional help. Using automatic payments is another of the financial recovery tips that many people do not consider. Making payments on-time helps increase your credit score, but it also prevents extra fees. For some people, these fees are the difference between being able to pay all of the monthly bills and falling behind. Once that happens, it is more difficult to regain the momentum they had for rebuilding their credit and becoming financially secure.

The real estate industry has undergone a transformation the past year. It has gone from a seller's market to a buyer’s market and the short sale is becoming more common. Homeowners who took advantage of the low payments offered by an adjustable rate mortgage five years ago are coming to realize they cannot afford the new, higher interest mortgage payments. Traditionally, the next step for homeowners would be to refinance their homes to a lower rate or take out additional equity in order to pay down other bills. For many though, the home’s value has dropped so significantly that the equity they thought they had is gone. Realizing that other steps must be taken, they turn to a real estate agent for options in selling.

Now they find that the home will not sell for enough to pay the balance of the mortgage, let alone the fees and commissions that accompany a sale. A short sale may be the homeowner’s best option for selling their home and avoiding foreclosure or bankruptcy. This is that process by which a home is sold for less than the total amount still owed to the bank, including accrued interest, any late fees, and the principal balance. Banks are becoming overwhelmed with the amount of inventory from foreclosures, with few people to buy them. Allowing a short sale to go through helps them collect much of the money they would not have otherwise been able to.

To qualify for a short sale, the homeowner must prove they have suffered a financial hardship and have fallen behind in their mortgage payments by several months. Once the inability to make the required mortgage payment has been demonstrated, they must be willing to cooperate with the process. If the bank forgives the remaining balance, a 1099 IRS tax form is often sent. The difference between the sale price and the amount owed is considered taxable income by the IRS in certain circumstances. Although this can potentially cause a hefty IRS bill, for many it is preferable to the alternatives. As well, there are certain exemptions that can decrease or eliminate the tax altogether. When a homeowner goes through foreclosure, it stays on the credit report for seven to ten years. It also lowers a credit score by up to 100 points, so selling at a short sale and paying some small amount of income tax may be worth it.

The short sale stays on the credit report for a much shorter period of time and affects the credit report by an average of 45 points. Thus, selling at a short sale is often the best solution for homeowners who can no longer afford their monthly payments, especially if the circumstances do not look as though they will change in the near future. Due to the increase in the foreclosure market and the number of empty homes owned by mortgage companies waiting for resale, many financial institutions are willing to be more flexible in helping homeowners find a solution. Using this method, re-establishing credit and securing a new loan is much faster than through foreclosure.