The New York State Mortgage Modification Initiative

The New York State Mortgage Modification Initiative is a program created and managed by Wallace Real Estate Solutions LLC designed to form a coalition of participating mortgage lenders, servicers, investors, insurers, housing counseling agencies and government agencies and officials that are committed to finding new solutions to the Foreclosure Mitigation Crisis. Our goal is to use a creative new approach to realign the interests of the distressed homeowner and the investor or true owner of the mortgage loan. This approach would keep more distressed homeowners in their homes at a payment they could afford, and minimize the loss to the investor now, while offering the potential of greater financial recovery over time. Our social mission is to stop the blight that abandoned foreclosed homes have on our communities and offer our distressed homeowners HOPE and the opportunity for a new start. A significant reduction in the homeowner’s monthly housing obligation and a stable path to recovery would encourage the homeowner to invest in and maintain their home, which would increase consumer spending and create jobs. This investment would also help stabilize our neighborhoods and real estate values especially in our poorest communities which have been the hardest hit by the economic crisis. The largest owner or investor in mortgages in this country is by far the US taxpayer. Through Fannie Mae, Freddie Mac, the FHA and VA the taxpayer is on the hook for a vast majority of our distressed mortgages. Government Agencies such as the Federal Housing Finance Agency, HUD and the VA have launched numerous programs to help distressed and underwater homeowners that have achieved significant results. During this process the well documented mistakes and delays on the part of our major mortgage servicers have left many borrowers further behind, and placed the taxpayer at a risk of far greater losses.

As a judicial state New York has one of the longest foreclosure time lines in the country, and recently has been estimated to take 52 months from start to finish. While this has allowed distressed homeowners to stay in their homes longer, many are stuck in limbo because they have been unable to obtain a mortgage modification through their current lender. Part of this has been due to the problems the lenders/servicers have had managing the process and part is due to the fact that many don’t meet the specific guidelines of the government or lender sponsored programs. While to some it may seem that we should just complete the foreclosures and move on, the cost of not using our new approach also has significant financial risks to the US taxpayer which can not be ignored. The back log of foreclosures in a judicial state such as New York is currently exposing the taxpayer to an enormous hidden financial liability.

Mortgage servicers on behalf of their investor, in most cases, advance monthly principal and interest payments as well as escrow advances for real estate taxes and homeowners insurance. These advances are made either to the investor directly, to a designated trustee, or directly to the mortgage security holder. When the loan finally completes the lengthy foreclosure process, the guarantor or insurer reimburses the servicer for all of these advances as well as the servicer’s servicing fees and expenses. These expenses include legal fees and other services provided by third party providers, some of which have relationships or common ownership with the servicers. These advances are the hidden losses that we the taxpayer, have yet to realize.

Wallace Real Estate Solutions LLC has developed a proprietary “Mortgage Loan Workout Report”, which analyzes the borrower’s hardship, their current financial situation, loss mitigation options, an automated valuation of the current market value of the property, and concludes with our proposed plan “The Wallace Plan”, that aligns the interests of all parties for the benefit of all. “The Wallace Plan” offers the distressed homeowner the opportunity to remain it their home at a payment they can afford, and offers the mortgage investor or insurer, the opportunity to limit their losses and maximize their potential financial recovery over time.

How the Mortgage Modification Initiative Program Works

Wallace Real Estate Solutions, as a consultant for NeighborWorks America would provide training for the current Foreclosure Mitigation programs as well as our program for HUD approved housing counselors throughout New York State. Our training would seek to identify distressed homeowners who have been unable to obtain a mortgage modification under the current programs. We would review real cases that have loans with initiative participating mortgage investors and insurers. With the input from the housing counselors, we would review how “The Wallace Plan” might be constructed to develop a plan to meet the goals of all parties.

Housing counselors would be able to submit cases on the behalf of their clients that have loans with program participants, to Wallace Real Estate Solutions for review. We would work with the counselor and the homeowner to prepare our report which would include” The Wallace Plan”, developed for that case. Upon completion and review with the counselor and homeowner the plan would be submitted to the servicer, investor, attorneys and courts if needed. We would follow up with all parties to reach a successful conclusion.

Conclusion

If we are truly going to solve our foreclosure problem, we need a new entrepreneurial approach that offers the flexibility to achieve the results that large organizations have not been able to deliver. If you or your organization is interested in joining The New York State Mortgage Modification Initiative, and being part of the SOLUTION in solving our foreclosure crisis in New York State, please contact us at mjwallace@wallacerealestatesolutions.com.

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