Attorney Peter Daigle Talks with Katherine About a Program called Making Homes Affordable

Katherine: Hello, everyone, and thank you so much for joining us here on This Needs To Be Said. We’re talking with our friend, Attorney Peter Daigle, and it’s been a while since we’ve heard from him because we’ve given you all the information you need to know about bankruptcy attorneys not being evil and bad and re-setting your life and getting back on the right track. Well, he’s coming to share with us about a program called Making Homes Affordable and this is something that has gone away from what he explained to me … He’s getting ready to tell us everything. He wants to bring some solutions to those who are looking at maybe facing bankruptcy or foreclosure. What help is left for you now that this program has gone away.
Katherine: So, I’m going to welcome Peter to the conversation and you make sure you take out your pen and paper like I have and make sure you take some notes. We don’t know any individual person’s situation and you may have not know to ask the question because I wouldn’t have known. Here we are. We want to share. Is the elephant in the room? You are struggling silently and we’re here to help give you some information. Welcome back to This Needs To Be Said, Attorney Daigle. How are you?
Peter Daigle: Thank you Katherine. Good morning. Thank you for the beautiful introduction.
Katherine: I did a good job, didn’t I?
Peter Daigle: Wonderful job as always. Just what I would expect.
Katherine: Well go ahead and educate us because I know nothing, like I haven’t even heard about it.
Peter Daigle: Our office tracks foreclosures that are occurring and we haven’t noticed any let up in the last few years. Essentially it stays fairly steady from even 10 years ago. With folks being noticed for foreclosure they were always calling us and finding out what are my options because this is occurring. Prior to December of 2016, the government initiated a program called Making Homes Affordable and what it was, it was a subsidy to the banks that allowed the banks to issue loan modifications. By receiving the subsidies, the banks were willing to allow the loans to be re-written and lessen monthly payment to allow people to come and get started again paying their mortgage payment because most of them hadn’t been paying them in years with a payment that was affordable and part of was being underwritten by the government.
Peter Daigle: Then the banks would take a look at doing a permanent loan modification where after the trial was done and if the borrowers were making the payment consistently on time, they would be offered a permanent modification to the loan. This was a way that quite a few homes were saved as a result of this program. Eventually the government said, “No more” to it and the program expired in 2016. Now the foreclosures kept coming though. Just because the program expired doesn’t mean that …
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Katherine: That there are no more people in trouble. Right.
Peter Daigle: Right. But as a general rule, banks don’t want your home. Even though they schedule an auction, a foreclosure auction, not always do you find bidders or a lot of times the bidders are trying to steal a property for a lot less than what’s owed on it or what the property is worth. We’re seeing a lot of the banks actually buying back their own property in foreclosures, ones that are not sold to a third party. When they buy these properties they have to set up these real estate departments. It means they have to mow the lawn and pay the insurance and keep the water on and the heat, have the pipes drained or whatever. They end up being homeowners and they don’t really want to be homeowners. And then what they’ll do is they’ll have to hire a broker to sell the property for them. Meanwhile have to keep the taxes current and all that. They don’t really want to do that. They’re in the business of lending money. They’re not in the business of taking care of homes.
Katherine: They’re not real estate.
Peter Daigle: As a result they are looking to get creative with the borrower. Really what they’re looking for is regular income. If you have no job and no income and no source of a way to pay the mortgage, they’re not going to modify you but if you have enough income to support even a reduced amount of what the original mortgage was, they have a number of programs that they’re working out for you. Typically loans are 30-year mortgages or 20 years or 50 years. They have different lengths. But what they’ll do a lot of times to update a 20-year they would make it a 30-year mortgage or a 40-year mortgage. So what happens is that they would spread out the time frame in which you have to pay off your house. Obviously on a shorter period of time the payments would be higher. So if they stretch out the number of years to pay the house off then the payment goes down, okay?
Katherine: Um-hmm.
Peter Daigle: What they’ll do a lot of times is they’ll take what you are behind on. Let’s say for a second just to make it easier, your payment was $1,000 a month and you haven’t made a mortgage payment in two years so you own $24,000 to play catch up. They take that $24,000 and they put it at the back end of the loan so for instance, that would not get paid off until the year 2030, 2040 or 2050 or whatever. In other words, so after the loan would normally be paid off you had to pay back the 24,000 which is what the amount that you got behind on. So between reserving that money that you got behind on to be paid back in later years or extending the loan to say 40 years or the terms of the loan, you’re able to then regain starting to make mortgage payments with a payment that’s less than what you were paying before.
Peter Daigle: This is something that you’re going to want to do before you get in too much trouble because what will happen is that if you wait too long and they schedule the foreclosure auction and the date is coming within like let’s say 40 days, 35 to 40 days, you’re not going to be able to take advantage of this because there’s not enough time to submit the paperwork. So they’re going to say, “Well, they waited till the last second. They had the option to come to us months or years before and try to modify this loan but what they did was they waited and all of a sudden here we are a week before the auction and they want to talk. Well, that won’t work.”
Peter Daigle: A lot of times they’ll send you paperwork too that’ll say, “Would you like some mortgage assistance?” You’ll get this paperwork from them and make you the offer so you definitely want to take advantage of that, a way to kind of modify the loan versus having to lose it at foreclosure. Or, if you wait too long then you’re going to be forced to file a bankruptcy just to stop the auction. What the Chapter 13 bankruptcy does is it stops the foreclosure process and then it gives you the time to modify it but you want to try to avoid that if you can by kind of getting ahead of it, getting the modification done earlier.
Katherine: Now I do have a couple of questions. So, the bank doesn’t want the houses back. However, you have a limit and I get it. You’re going to auction so they could possibly get some money. What is the possibility of, “I waited till the last minute.” They say, “Nope, it’s going to auction” but my house doesn’t sell. Do I have another chance or am I out of the picture by that point?
Peter Daigle: So you’re saying you can’t sell your home for some reason. You said you’ve tried to sell but …
Katherine: No, no, no. I think I’m understanding. We go to the bank to get the loan modification or get the assistance but I didn’t go in plenty of time like you suggested. I went the last minute and they said, “Well, we’re going to auction”, but when they go to auction, my house doesn’t sell. Am I out of the picture at that point or do I have another chance? It’s a great thing if you do but …
Peter Daigle: Yeah. So let me do … It may have been confusing. If you do not get a loan modification or you do not file bankruptcy, bankruptcy will stop the auction also. But if you don’t file bankruptcy and you don’t get the loan modification, the house will be auctioned off that day. Now, an independent third party may not buy it but the bank will buy it. You’re going to lose all rights on that day. They’re gone. The only option you have at that point is … well, you don’t have any options. You’re out of the house. Maybe they’ll give you some money to move but generally speaking, that’s it. It’s over. You have to file bankruptcy on the eve of the auction if you can’t get the loan modification approved.
Katherine: You said they’re looking for regular income … No, that wasn’t the question I had. Would the 24,000 you said if you’re able to get the assistance they’ll put the $24,000 at the end of the loan?
Peter Daigle: Right.
Katherine: Is it going to be a lump sum they’re going to expect or is that just going to be …
Peter Daigle: No, no, 24 months.
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Katherine: You just have additional payments, additional months to make those payments?
Peter Daigle: Yeah. So let’s say the loan would be paid off in 2030. It would be 2032. So for two more years you’ll make 1,000 a month. It’d be the same payment. You wouldn’t be paying it off as quick as you thought.
Katherine: Now they’ll re-set you? You’re not behind. You’re no longer trying to keep up the pace because you …
Peter Daigle: Right.
Katherine: Okay, gotcha, gotcha. Well, the thing I discovered is that people don’t like confrontation and confrontation doesn’t mean a fight. It just means I have to now come face-to-face with Peter and say, “Hey, I need help.” Do you have any suggestions or … No, no. That’s the wrong question. What suggestions to you have for a person to overcome that because people usually don’t move until the last minute because it’s like, “Oh, I don’t have any options. I have to do something.” They wait till they have to as opposed to … Did you say 60, 45 or 60 days?
Peter Daigle: Well, generally speaking 37 days before they won’t accept a loan modification anymore if the completed loan modification is not submitted prior to the 37 days, they’re not going to accept it. What we see, so many people live in fear. Fear grips them and then they don’t know what to do. The only thing that can melt fear is information, education because once you have the necessary information that you need, then there’s no strong reason to be fearful. A good loan modification specialist or an attorney will be able to tell you whether or not you qualify for a loan modification so that you’re not wasting your time. If someone came to us because they couldn’t afford their home and all of a sudden the bank began a process of foreclosure, they could come to us and we could tell them whether or not they had a reasonable likelihood of getting a loan modification.
Peter Daigle: For instance, if neither one in the home were both unemployed, it just wouldn’t work because the bank is not going to continue a loan or modify a loan when no one in the house is employed. You have to have regular income. It’s difficult for people that are self-employed or waitresses with tips or whatever because a lot of times the money doesn’t go in the bank. One thing to impress upon folks is that the income has to be verifiable. You have to have bank deposits if you’re self-employed or paychecks or something to show that you make this money. This just can’t be something you tell the bank that you make. Or you say, “Oh, I’m going to be making it at some point.” They don’t want to hear that. It’s got to be based upon something for sure.
Peter Daigle: So we’re able to look at these things ahead of time and sometimes bankruptcy helps because if someone could say I’m just … We have a lot of times people will say, “Okay, I’m going to graduate from nursing school in May and I’m going to be an RN and I’ve got this job offer waiting and oh, my God, I just had to not work because I’ve been going to nursing school and therefore once I graduate I’ll be making 80,000 a year.” Well, that’s something that we then could maybe put the person in bankruptcy just for six months or so to be able to complete school, get the job and then revisit the loan modification afterwards. So if there’s an event coming in the future that’s going to allow you to get back to work because you were injured or unemployed or something, that’s the reason bankruptcy would help because it gives you more time.
Katherine: Would you say what you said about fear and education again? You were saying something about people are in fear and through education they could …
Peter Daigle: They’re paralyzed by fear because they don’t have the necessary knowledge or information that allows them to think through some options. They just, “Oh, my God, I’m losing my house. The bank foreclosing” and therefore they’re just hung up on … They’re paralyzed by their fear and their body just is seized with fear. How we can again, I think I used the expression melt the fear away, is by giving them information.
Katherine: Melt the fear. That’s what it was. I was like what did he say? Yeah, melt the fear away. That’s what it was.
Peter Daigle: Yeah. So we’re able to then come back to them and say, “You know, you don’t need to be afraid because these are some options that you have.” It’s like anything else when you don’t feel well, you think the worst with your medical condition or whatever it is. I encourage people to seek out information, seek out professionals that can help.
Katherine: Absolutely. And speaking of professionals, we are at the end of our time. Attorney Daigle, Peter, please tell us how to get in touch with you outside of This Needs To Be Said.
Peter Daigle: Sure. Thank you. I have lots of information on my website. A lot of what I’ve explained today is on my website which is daiglelawoffice.com. You can go there and watch the videos and also request a book that I have written. But also if you’d like to call the office and make an appointment, our number is 508-771-7444 and I’d be happy to give you a free consultation to see if somehow I can get you back on track.
Katherine: I appreciate it. Every time you come we always get lots of great information. I enjoy my time with you. Until next time, have a wonderful day.
Peter Daigle: Thank you, Katherine. Goodbye now.
Katherine: Thank you.
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