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Fighting Foreclosure; Barkley Begins Jail Sentence
Aired March 07, 2009 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
FREDRICKA WHITFIELD, CNN ANCHOR: All right. Hello again, everyone. I'm Fredricka Whitfield. And this is now a special hour. Straight ahead, fighting foreclosure and clinging to the American dream. President Obama's $75 billion mortgage makeover plan. Who qualifies? And how will it help you? Our focus this hour, helping struggling homeowners right here in the CNN NEWSROOM.
So here is who we are talking to this hour. Rob Holley is a realtor in Atlanta, a franchise owner of Century 21 Holly Realty. And Bob Molten is a lender, the president of Americana Mortgage Group. He is in West Palm Beach Florida. And Steve Woodall is one of millions of Americans trying to avoid foreclosure but actually thinking it just might be his only option. He's lost about all of this. His job scenario changed a bit. But sadly his house, well, the worth is less than what he actually owes on it. He is joining us from Tampa. And as always our Josh Levs is fielding your i-reports, Facebook and e- mail questions.
All right. We got a great panel here and before we get to our guests, let's make sure that we're all up to speed on what President Obama is actually proposing. CNN personal finance editor Gerri Willis has details.
(BEGIN VIDEOTAPE)
GERRI WILLIS, CNN PERSONAL FINANCE EDITOR (voice-over): The plan dubbed making housing work helps two groups of homeowners. The first are people who are underwater in their mortgage. That is, they owe more than their home is worth, but are current in their payments. Their mortgages will be refinanced into a new loan. Their principal will not be reduced but their payments will be lowered, or they will be able to afford painful rate resets.
The other program sets out to help homeowners who have lost a job or behind on their payments and at risk of foreclosure. Those borrowers will be eligible for loan modifications in which the lender lowers the interest rate or principal load. This will cut the monthly mortgage payment and more importantly help avoid foreclosure.
(END VIDEOTAPE)
WHITFIELD: And both programs require that you actually live in your home. This is your primary home and that mortgages be less than $729,750. All right. let's begin this conversation. Steve, I want to begin with you because your situation is duplicated many times over across the country. Here you live in Tampa, Florida. You bought your home for a pretty sizable figure. What $270,000 but now it is upside down. Your job scenario changed. You no longer making as much money as you once did. But that didn't change how much you owe per month. What your mortgage now represents 50 percent of your take-home pay?
STEVE WOODALL, HOMEOWNER FACING FORECLOSURE: Right.
WHITFIELD: OK. So when you hear about this mortgage modification plan, Steve, does this feel like this is going to be the solution for you? Do you feel like you can now save your home?
WOODALL: Yes, I don't know what to think at this point. When I just started the process calling my mortgage company last month and they didn't really have a lot. Well they're like, well, wait until, you know, the Obama stimulus comes out in March. But realistically they told me that they can't really do anything unless I don't make my payments. And I'm not sure what to do.
WHITFIELD: And you hate hearing that right? Because here you are. You've been paying your mortgage. And you, like all of us, think that you want to keep your credit in good standing. So you want to pay your bills on time. But by getting this kind of runaround, you're actually considering now foreclosure as an option?
WOODALL: Well, the deal is with the house payment being 50 percent of your take-home income. We had a baby. My wife is no longer working. It's not a sustainable path that we're on. That something needs to change. And we're just trying to figure out what to do. At this point I would rather have cash than good credit. We don't need anything. You know, I'd rather have an emergency fund. We're not able to save. We don't have life insurance. We're - ideally it's valuable for me to be able to give. We're just living paycheck to paycheck. And it's just not sustainable. So we're trying to figure out what option do we have.
WHITFIELD: And when you talk about you know saving your cash, meaning, you're even considering just not paying your mortgage for a few months, pocketing that money so that you have it for a safety net, and you're willing to kind of roll the dice and see what happens next?
WOODALL: Exactly. I mean, we're so upside down in the house. I feel like I'm following the mortgage company's rules. And they flat out told me. Hey, you know, you get a file assigned to you. You tell them all your finances. They assign you to a specialist or something, that takes 30 plus days and then by the time they get your file, it takes another 30 plus days for them to contact you. And they tell you that if you make a payment, your file - you lose your line. Your file is wiped away and so -
WHITFIELD: Very confusing messages -
WOODALL: Right.
WHITFIELD: From your own lenders.
WOODALL: Right. I don't want to lose my house. But I also can't continue to be at the pace that we're at right now. WHITFIELD: OK. So you are in a quandary as are a whole lot of Americans. In fact, the Obama plan is promising that this plan might help avert something like four million foreclosures.
Josh Levs has been fielding e-mails all day long. In fact, there are a lot of folks who are actually kind in the same boat as you, Steve.
WOODALL: Yes.
WHITFIELD: And we've even received a lot of i-reports. How are people able to relate to Steve's story, Josh?
JOSH LEVS, CNN CORRESPONDENT: I will tell you something, Fred. You know going through this Facebook messages that we're getting and the e-mails. It gets to be heart wrenching after a while. Let's zoom in on the board, I want you to see. Throughout the hour we've been monitoring this. This is Paul Giamatti: of Facebook, joshlevscnn. Let's go straight over to the e-mails because I want you to see what a bunch of people have written us.
WHITFIELD: Yes.
LEVS: This is the central question here. What to do if the bank doesn't want to talk to you, the owner? Any answers would be appreciated. And I want to zoom down to the next story. I think this says a lot, Fred. Check this out. February, 2008. I started contacting my the mortgage company to find out how much it would cost to establish an impound account. When I finally received a response it was that they impounded my account. And my mortgage was going from $1350 a month to $2500. No one would speak with me.
WHITFIELD: Oh, my gosh.
LEVS: And I'm now being advised that my home is in foreclosure. So here's what we need to hear from our guests here.
WHITFIELD: Yes.
LEVS: Not what's obvious. Why are people not aware of that can get the attention of the people in power so they can get some help?
WHITFIELD: Well, let's go there right now. Because we know, Steve, you did make those phone calls. People did answer your calls. They did give you some answers, even though they weren't necessarily the ones that you wanted to hear. But Bob, let me ask you. Bob Moulton, you're a lender. You're used to dealing with people and their questions all the time. What do you tell some of these folks who are calling, who are saying or e-mailing saying, you know what, I can't get a straight answer at anyone. I can't get anyone to answer my call. What do you do?
BOB MOULTON, PRES. AMERICANA MORTGAGE GROUP: The process is very overwhelming. And he government has been trying to suggest to lenders to be more attentive to homeowners' needs. Steve is a very classic example of how the new Obama plan is going to assist homeowners. Steve's income, his mortgage payment, which should include his principal, his interest, his taxes, his insurance, and maybe his homeowner's association dues if he's in a condominium. They come to 50 percent of his take-home pay.
What we need to do here under the new plan, under the loan modification program, is see what percentage of his home expense is of his gross pay. If it exceeds 31 percent, what the loan officer at his existing financial institution is going to do is come up with different fixed rate, interest rate scenario scenarios, going down to as low as two percent.
LEVS: Bob, I'd like to interject. That is helpful. But if someone is in the situation where they can't get you to talk to them and say these are your options, what do they do?
WHITFIELD: Where do they go?
MOULTON: Well, this plan has just been proposed this week. You have to give it time. Right now there really hasn't been the attention to specific homeowners to help with that situation. So you have to give this a little time. Let it roll out. It does take a while for these government plans and suggestions to trickle down to street level.
So in this particular situation where it's going to help four million homeowners under the loan modification program. I give it another couple of weeks, maybe a month. And then he's going to try to work his expenses down to 31 percent of gross income.
WHITFIELD: Bob, it sounds like your pretty confident that this plan is going to work. But, you know, Rob, you're getting phone calls from your clients all the time. People you sold homes to who are now calling you and saying help. Do they feel confident that this Obama, this mortgage modification just might help them?
ROB HOLLEY, REALTOR, CENTURY 21: I don't think they feel confident. As the man in Florida said, the information is just out. So it's new information. Based on what we've seen so far there is a tremendous lack of confidence. We don't have good stories of going to lenders to say modify or help the borrower out or do anything. You rarely speak to a human. You're talking to a machine. We've had answering machine actually say at lenders, if you've already left a message, do not call again. That's how unfriendly the process is up to this point.
WHITFIELD: OK. So we need to now get down to the steps that you can take if you're facing foreclosure. You're worried about it being right around the corner. What are the steps that you take beyond the fact that you need someone to answer the phone on the other end? We're going by step by step what you need to do, to get some answers, to get some help right after this.
(COMMERCIAL BREAK)
WHITFIELD: All right. Welcome back. We're talking about mortgage modification. Earlier in the week, we heard the Treasury Department as well as the White House talk about how this is going to help avert four million foreclosures. Just listen.
(BEGIN VIDEO CLIP)
PRES. BARACK OBAMA, UNITED STATES: It's a plan that won't help speculators or that neighbor down the street who bought a house he could never hope to afford. But it will help millions of Americans who are struggling with declining home values. Americans who will now be able to take advantage of the lower interest rates that this plan has already helped to bring about.
(END VIDEO CLIP)
WHITFIELD: All right. That was President Obama before Congress just over a week ago. This week the white house ruled out the plan of this modification, mortgage modification plan. What does it mean to you? We got a great panel here with us right now. Rob Holley is a real estate agent here in Atlanta. He has his own franchise of Century 21. Bob Moulton is a lender, president of Americana Mortgage Group, out of West Palm Beach, Florida.
Steve Woodall is a homeowner whose property is underwater, as they say. He owes much more than it's actually worth right now. He's in Tampa. And he's actually considering foreclosure as an option. Not because he's default. But he's thinking that maybe this is a lifeline. And Josh Levs is fielding your e-mails and i-reports. All of that. We got so many questions to keep this going.
So Bob, a little bit earlier, you know, we talked about who this might -- who might be eligible for this mortgage modification plan. There are two plans in place, right? One to refinance and one to get modification on your mortgage. So what are the steps that one takes that they think they're in trouble.
MOULTON: Well first with the modification program, what the homeowner needs to do is get their paper work in order. They need to be organized, get their tax returns, get their pay stubs, and get their bank statements. Secondly, they need to come up with an affidavit of hardship to explain why they're in this particular situation. They need to contact the person or the lender who has their current loan. And I know some of the major banks have approved the concept that has been proposed this week to support the program.
What the loan officer is then going to do is calculate what the debt is as a percentage of their income. If it exceeds 31 percent, and they have a hardship letter, they're going to go to the next step, where the loan officer is going to try one of two things. They're going to keep trying to recalculate the mortgage payment at lower interest rates until they find the interest rate that is going to make the debt to income 31 percent. If they get as low as two percent, which is the floor that the government is proposing to use for fixed rate mortgages. They are then going to amortize the loan over as long as a 40-year period.
WHITFIELD: OK.
MOULTON: Which will reduce the payment even further.
WHITFIELD: So there are a lot of steps that you need to take on your own before you actually make that phone call, reach out to your lender to see, you know, what can be done. Steve, I know that you reached out to your lenders. You have two interest-only loans.
And it's not that this was necessarily balloon payments that things kind of skyrocketed with interest rates. But in your situation, since your job changed, your income changed, it meant that I guess the portion of your paycheck, how much was going to your mortgage then became pretty sizable and unmanageable.
WOODALL: Right.
WHITFIELD: Did you feel like you were getting all the answers from your lenders when you made the phone calls?
WOODALL: Kind of. One of them - I have one mortgage that's interest- only. And then a second mortgage, that's a 30-year fixed.
WHITFIELD: OK.
WOODALL: It's a seven-year arm. So one of them was not helpful. The second really at all. And then the first one was the one that told me basically, you know - they take your information over the phone. But if you make a payment, you lose your spot and the whole process until someone contacts me --
WHITFIELD: So, Bob, help Steve. What do you think he should do at this point?
MOULTON: I think he should get his paperwork together. And we should try for the loan modification program. The second program that the government just proposed is the refinance proposal where the - if you're upside down in your mortgage up to 105 percent of the value of your house and starting April 4th you can shop your loan around with different lenders.
So if your house is worth $300000 and your mortgage is $315,000, say about five percent higher than what the house is worth, you're going to now be able to refinance that mortgage. What's happened over the last two years is lending guidelines have gotten very strict. Lenders were looking for homeowners to have more equity with the property and higher credit scores.
And that sort of hurt the whole problem that we're in. Because if you look at the lending laws, four or five years ago where people were buying houses with no money down and no jobs, lenders have now gone to the other end of the pendulum where they're gotten very strict. This is going to hopefully open the door for five million more homeowners. So you're going to have four million that are going to benefit from the modification program. Five million that are going to benefit from the refinance program. But it must be your primary residence. And you do need to document your income.
WHITFIELD: OK. We've got lots of e-mail questions coming our way. And you know, Rob, I want to ask you, too. You put me in touch with Steve. And you have a relationship with Steve. And it must be heartbreaking for you as a realtor to see, especially the beautiful pictures of you know, Steve and his family enjoying their home, and then hear from your clients that you know, they're in trouble.
So we're going to talk about some other options that may be available. Perhaps your situation, you're not going to be able to get all the answers from the mortgage modification plan unveiled by the White House. But there are other things that you might be able to do right after this.
(COMMERCIAL BREAK)
WHITFIELD: All right. Welcome back. We're talking about how to avoid foreclosure. Earlier in the week Treasury Secretary Tim Geithner had this to say about refinancing modifying mortgages helps everyone.
(BEGIN VIDEO CLIP)
TIM GEITHNER, TREASURY SECRETARY: This plan will help homeowners meet their mortgage obligations and enable them to refinance to take advantage of lower interest rates. Just this morning we took the important step of releasing the details of our loan modification plan and Treasury guidelines for servicers. This will help struggling borrowers begin to see lower payments, more affordable payments right away.
(END VIDEO CLIP)
WHITFIELD: All right. We want you to be part of the discussion here. Rob Holley is a realtor here in Atlanta. Bob Moulton is a lender in West Palm Beach, Florida. Steve Woodall is a homeowner in Tampa whose property is underwater, as they say. And Josh Levs is here also, fielding your e-mails, your i-reports, all of that.
All right. So let's talk about I guess the options that people have right now. Bob, refinancing is another option under this modification plan. Give us a little bit more on how would you be able to refinance under the White House's new plan.
MOULTON: Before the White House made this proposal this week, lenders were only lending say 70, maybe 75 percent of the value of the home. What this will help is homeowners who are under water up to 105 percent. So if they have a house that's worth 300,000 and the mortgage is $315,000. Under the new guidelines, it's going to enable a homeowner to get a fixed rate -
WHITFIELD: OK. But is there a catch?
MOULTON: As far as I can see right now, the devil is always in the details. I can't see if there's a catch. But looking at the summery of the proposals and trying to interpret what the government is trying to say, I don't see a catch as yet.
WHITFIELD: OK.
MOULTON: What I have seen over the last year or so, it takes a while for these plans to trickle down to the street level.
WHITFIELD: Yes.
MOULTON: So I know when they increase the conforming loan levels from 417,000 up to 729,750. Each one took its time.
WHITFIELD: Steve is in that situation, that predicament. His house, he bought it for $275,000 but now it's worth or I guess the market value is I guess, $175,000. So you would think he would qualify for this plan. So Josh, what are other people saying about their predicament and why they have little faith that this program would help them.
LEVS: Because they have little faith in the system. I don't want to harp on this but I feel like we really captured it earlier and I think I have to represent for all the people who are writing us here on our Facebook page, the e-mails. This is what they're saying, Fred. They don't trust the system. They don't trust the lenders. They don't trust the brokers. They have tried so many times. And when they have, often in many cases, they've gotten bad results.
So what I want to hear from Rob or Bob, if someone needs to get your attention, yours, in your case, what works for you? Or if you would rather do a third person thing, if they're not getting the attention of the people they need to get, what are their options? What do they need to do? What are the means of recourse?
WHITFIELD: Rob.
MOULTON: You know, I was looking, researching this topic this morning. You have to go to the Fannie Mae website. This is only going to pertain to the Fannie Mae and Freddie Mac loans.
WHITFIELD: OK.
MOULTON: So you have to take the initiative. There's got to be a contract -
WHITFIELD: That's right. You do have to learn whether it's a Fannie or a Freddie. OK. So Rob, what -
MOULTON: You need to learn where your loan is serviced.
WHITFIELD: OK.
MOULTON: Only 80 percent of the Fannie Mae loans and Freddie Mac loans are serviced by Fannie.
WHITFIELD: OK. So Rob, what are you telling people when they call you and they say, you know, what do I do? Where do I go?
HOLLEY: Well, I think Steve's problem is the right problem that we need to be hearing. And that is the lender has said to him, if you're current on your payments, don't call us. And so there is no recourse for somebody who is current on their payments. And if the new plan has just come out, addresses that, they're going to have to roll it out very fast, like Bob is saying. Six months. 12 months for this to roll out is going to be a failed time for lots of people. WHITFIELD: And then we're also understanding, there's more movement on Capitol Hill. The House earlier in this week said OK, we're going to allow bankruptcy judges to perhaps order lenders or mortgages be readjusted. And now we understand the Senate will be entertaining that same thing, coming up next week.
Meantime, however, all this while you're trying to save your home, you're also trying to save your job. You also want to keep your family in check and together. How do you do it, right after this.
(COMMERCIAL BREAK)
WHITFIELD: Here's a quick look at what's happening right now in the news. And then we'll get back to talking about the mortgage madness that everyone is grappling with.
With the unemployment now at a 25-year high, President Obama says help is on the way. The latest report puts the jobless rate at 8.1 percent. The highest since 1983. It's even worse for minorities. 13.4 percent of African-Americans are unemployed. And 10.9 percent of Hispanics are out of work. In his Saturday radio and internet address, President Obama said he's working to turn things around for everybody.
(BEGIN VIDEO CLIP)
BARACK H. OBAMA, PRESIDENT OF THE UNITED STATES: My administration is committed to doing all that's necessary to address the crisis and lead us to a better day. That's why we're moving forward with an economic agenda that will jump-start job creation, restart lending, relieve responsible homeowners, and address the long-term economic challenges of our time -- the cost of health care, our dependence on oil, and the state of our schools.
(END VIDEO CLIP)
WHITFIELD: So the state of housing is something else the White House is grappling with. The promise coming from the Obama White House is that the new mortgage modification plan can help avert some four million foreclosures.
So we've been taking in your iReports as well. Many people very vocal about it all.
Scott Bratcher of Cape Coral, Florida, has been going around and around with his mortgage company trying to get some answers. He sent us this video commentary.
(BEGIN VIDEO CLIP)
SCOTT BRATCHER, IREPORTER: My house is worth a third of what it was when I bought it four years ago. And what the American people need who are upside down on their mortgages like we are is a write-down.
My bank is unwilling to do a write-down, and they're only willing to do a refinance if we come current on our mortgage. And that's just not feasible. And what's worse is my bank or my mortgage company is owned by one of those big banks that ended up going bankrupt a year ago. I'm just afraid that we're screwed.
(END VIDEO CLIP)
WHITFIELD: All right. People are very upset about it, and very worried about how this is impacting their personal lives in a lot of different ways.
So let me reintroduce to you our guests. We're having a great discussion here.
Rob Holley is a realtor here in Atlanta. Bob Moulton is a lender out of West Palm Beach, Florida, with Americana Mortgage Group. Steve Woodall is a homeowner in Tampa. His home is upside down, but he continues to make his payments on time, but is wondering, should I just foreclose? And then Josh Levs is taking in a lot of your e- mails, your questions as well.
So, Josh, let me begin with you, because a lot of folks are expressing in so many different ways that they're afraid of losing their home, losing their job, also means they lose their families.
LEVS: Yes, that is one of the things we're hearing about. Let's get right to one of these e-mails. I'll show you. it's interesting.
This is from Pat. "How do I handle a relative's foreclosure when we were the cosigners almost 10 years ago and now have our own financial problems?"
Fred, I pulled this out because this isn't the only one about this. A lot of people were cosigners. Now their families need them and they have their own problems.
What do you do?
WHITFIELD: Well, Rob, let me ask you, because you're getting questions from people who have that same kind of question. What do you say to them?
ROB HOLLEY, REALTOR: Well, unfortunately, the answer to that question is short. And that is they're in big trouble. When you cosign a loan, you're said I'm going to take up where they leave off. So they don't have a choice.
WHITFIELD: Oh boy.
HOLLEY: Yes.
LEVS: One of the many people who didn't see this coming and put themselves in that situation.
WHITFIELD: OK.
What else, Josh? LEVS: Yes. Let's zoom back in. I want to show you some interesting things. I chose the ones that are representative of a lot we're getting.
This comes from Carlos. "I have a job. I'm pre-qualified for a loan. Should I buy a House now or wait for the housing market to go further down?"
It's the ultimate gamble in the housing market right now, but the people who can buy, should they do it right now?
WHITFIELD: Well, you know, it's interesting, because Florida, Arizona, you know, these are two of the states that are looking at home values going down up to 40 and 50 percent.
So, Rob, is now a good time to buy if you happen to be in one of those very depressed areas?
HOLLEY: Well, I'm hoping the $8,000 stimulus would be an incentive for that person to buy.
WHITFIELD: Yes.
HOLLEY: The question is, where is the bottom? In my opinion, we've been in this two and a half years, maybe three. And so guessing the bottom, good luck.
WHITFIELD: Oh, boy.
HOLLEY: Yes.
WHITFIELD: Oh boy.
OK -- Josh?
LEVS: Yes, this is great. Let's get to another one from Rick. I find this interesting.
"What I'm surprised about is that the banks will not meet homeowners in the middle with write-downs and include an increase clause for if/when the market turns around."
Fred, I think I saw 50 messages. This one is Facebook, but I think I saw 50 messages with the word "write-down" very prominently.
(CROSSTALK)
WHITFIELD: And what is it? I wan to know, what is a write-down?
Bob?
BOB MOULTON, LENDER, AMERICANA MORTGAGE GROUP: A write-down is when a bank will accept a portion of the outstanding mortgage balance. But there's two other things that need to be addressed here.
WHITFIELD: OK. MOULTON: Homeowners should look at short sales. Short sales have become very common, where a homeowner will sell a house for less than what the outstanding mortgage balance is. And the bank will forgive the portion that's the difference between what they sell the house for and what the outstanding balance is.
The other thing homeowners can look at is giving the bank the deed in lieu of the house, so if they can't make their mortgage payment, they can't sell it, give the bank the deed. Say, here, take the house, and then they can walk away. That would not tarnish their credit as bad as a short sale.
WHITFIELD: OK.
So, Steve, you are in this predicament. You're hearing it now. You're hearing all these experts with all different kinds of opinions.
Are you hearing anything that is giving you a new idea or kind of a new lease on this point forward with your situation, your upside down or under water home, and whether you keep it and whether you foreclose?
You hearing anything you like Steve?
STEVE WOODALL, HOMEOWNER: Yes, I mean, I like that there's a possibility to potentially lower my payment, but it doesn't -- I don't know the outlook for, am I going to regroup on my payment? You know, I have basically five years left on my adjustable mortgage, and am I going to be back to where I can refinance, or am I going to regroup on that $100,000, I'm upside in five years? Who knows?
I guess I'm hearing some positive to lower my payment, which is what I want to do, but then I'm still sinking money in a lost asset. So I'm not sure yet. I'm still praying about it.
WHITFIELD: And what's this doing to your family, your relations at home? You've got a 4-month-old baby at home. Your wife is at home.
Is this stressing you guys out? I mean, are you having a hard time even enjoying your new baby because you're worried about the bills and this mortgage?
WOODALL: I mean, yes, there definitely is an extra sense of stress. My wife is very great and supportive in whatever we do, and having the baby is a great thing. He's awesome.
You know, ultimately, I definitely believe the lord's our provider. And so we're trusting it's all going to work out. Still, that's why I called Rob last month, is, "Hey, man, what should I do?" I still don't know. We're trying to figure it out.
WHITFIELD: Yes.
And what did you say to him, Rob?
HOLLEY: Well, he called me and he said, "Rob, I've got a problem. Should I stop making my payments?" And he related the story.
And he said, "I have an interest-only loan and my lender says they won't talk to me unless I'm behind in my payments. So my choice is make my payments on a $250,000 mortgage, on an asset that's worth $180,000, or stop making my payments." He said, "I'm 28 years old. If I lose the house, in seven years my credit will be fine. I can save money and rent."
And so that's a hard question.
WHITFIELD: Wow. And it's hard to accept, anybody to accept that, you know what? My option is I should default, I should go ahead and foreclose, because you do think about, you know, your credit rating.
So we're going to talk about that, your options. Why in the world are we even thinking about foreclosure as being an option? Not necessarily, you know, I guess the default, but a real option?
And the mortgage modification, it's supposed to be free for everybody. But watch out. There are scams already.
(COMMERCIAL BREAK)
WHITFIELD: All right. So welcome back.
So if you do qualify for the White House re-fi or mortgage modification plan, it should not cost you a penny, reminds us -- says financial analyst John Hope Bryant of Operation Hope.
(BEGIN VIDEO CLIP)
JOHN HOPE BRYANT, OPERATION HOPE: Do not pay $400 to $1,600 to some so-called nonprofit credit counseling agency to modify -- supposedly modify...
WHITFIELD: Save that money. If you have that money, save that and maybe put it toward your mortgage or something to actually save your home?
BRYANT: No, ,it's worse. It's a fraud. You're being pimped again, because these folks will put a lawyer on your case that then won't -- the lawyer is the only person who can talk to your lender. You need to call your lender. As soon as you call your lender, the lender will stop foreclosure proceedings.
(END VIDEO CLIP)
WHITFIELD: OK. So we spoke last hour. And we are still talking, because this is something that really gets under the skin of so many people trying to save your home, trying to avoid foreclosure, all of that.
So Rob Holley is a realtor here in Atlanta. He is with us still. Bob Moulton is a lender out of West Palm Beach, Florida. Steve Woodall is a homeowner in Tampa, and he wants to keep his home. And Josh Levs is fielding your e-mail, sifting through all of it. Josh, let's begin with you. How concerned are people about being had?
LEVS: Very. Very concerned. And like I told you earlier, they're not trusting the system right now.
I'll mention quickly, if you're just joining us, it's weekends@cnn.com or the Facebook page. You'll see my name, Josh Levs CNN.
Let's zoom in. I want you to see this question right here, and I'll summarize it.
Basically, this family makes over $250,000, has $300,000 in the bank. But they still are not allowed to refinance. And the reason that they're given is that the LTV, the loan to value percentage, is the same from when times were good, "And our home has lost value."
And she asks -- this is Chris (ph) -- "How is this right? How is this going to fix this mess?"
And Fred, I think I've heard from more than 20 people who have plenty of money at this point and still are not allowed to refinance. How can they fix that?
WHITFIELD: Oh, interesting.
OK. So, Rob, I wonder, since most people are dealing with their homes dropping in value, and some 15 percent, is there anything you can do to increase the value of your home when everything else around you says it's diminished? Is there any help for this person?
HOLLEY: Not in the short term.
WHITFIELD: Can't do anything?
HOLLEY: I mean, I don't think so. I think we have got to increase the demand for housing.
If the optimism of the buying public can return and we can get more buyers out in the marketplace, that's the only thing that's going to stop the slide of prices. And I'm not convinced that the $8,000 is going to do it. And I certainly don't think an $8,000 stimulus to first-time buyers is going to stop this.
WHITFIELD: The incentive.
HOLLEY: It has got to be to every buyer that's buying their primary residence, and it needs to be the Johnny Isakson bill of $15,000. It's going to take years for this to trickle up, down, or wherever it's going to trickle for this only to be addressed to first-time buyers.
WHITFIELD: All right.
Josh, anybody optimistic about the scene out there?
LEVS: I promise I will give you some optimism by the end of the show. I have that, it's just not ready on the board. It's in a different place.
WHITFIELD: OK.
LEVS: But unfortunately, no...
WHITFIELD: Well, what else is getting folks...
(CROSSTALK)
LEVS: Let's zoom back in. A live question is coming in on the Facebook page here. I want you to see this. I think it's a great question.
Weeza says it might be moronic. "If housing is as horrible as it's perceived to be, perhaps a simplistic view may make me sound moronic, but why don't they take all the vacant homes and all homes in danger of foreclosing and repackage them? Why don't they just grab them and put them on the market?"
It's an interesting theory. What is that reason?
WHITFIELD: Rob, would that be something...
HOLLEY: Isn't that what's happening?
(CROSSTALK)
HOLLEY: The vacant houses are being put on the market. So, I mean, that's happening.
WHITFIELD: All right. The auction block, et cetera.
LEVS: But isn't it an incredibly long delay? I mean, don't we hear about a home foreclosing and it takes an incredibly long time before it's anywhere on the market?
HOLLEY: Absolutely. You know, and you can go out into the Atlanta marketplace in any zip code and find 7,500 -- in (INAUDIBLE) County, there's 200 foreclosures on the market today.
WHITFIELD: Any questions, Josh, for Steve? Any questions that, you know -- or maybe even comments? Any advice for Steve who wants to stay in his home? He's got a 4-month-old at home, but, you know, $100,000 off the values of his home. He's wondering, what should I do?
LEVS: They are. In fact, let me just -- the people who wrote us had it scattered several places in e-mail and on Facebook.
Basically, what they want to know is, right now, you're trying to decide between whether to go ahead or whether not to. To a lot of people, foreclosure is such a big, bad name. They want to know, hat's the draw? What is big enough of a benefit to foreclosure that you might choose, given a real choice, to go there?
WHITFIELD: Ooh. Steve, can you answer that for us? Why would you want to choose foreclosure?
WOODALL: Mine is just because, again, I don't feel like I'm on a sustainable path. I don't need anything at this point. I would rather have cash than credit.
And I'm to the point that, I guess take advantage of my youth and regroup. Hurt my credit, store up a bunch of cash, and start over in a few years.
WHITFIELD: Interesting.
Well, so, Bob, I would love to hear from you, because as a lender, of course, you're looking at people's credit report and you're saying usually to your clients, you've got to have good credit. So when you hear from a young man like Steve, who says, I'd rather have cash than credit, ,long term, does that really bode well for him?
MOULTON: The credit report is so important. It's an indication of one's ability to pay. It's not only used by lenders, it's also used by insurance companies. It's going to affect you if you want to lease a car or if you want to buy a car, if you want to buy a life insurance policy or another homeowner's insurance policy.
Whatever you can do to avoid foreclosure, I always try to recommend it. I would be a little more patient. I understand you're under water. I feel very sorry for your situation. But let's see how this new plan trickles down to the street level, and maybe you can benefit from it.
WHITFIELD: So it sounds like you really do have to try again. I know you've talked to your lenders repeatedly. But it sounds like maybe as a result of the rollout this week, you've got to go back to them again and see if there's any wiggle room for you.
Do you feel confident about doing that, Steve?
WOODALL: Yes. I actually called them again before coming on. And now you get a voicemail that basically says put together your pay stubs, your W-2s, your expenses, any debt. You have to put all that stuff together.
I'm not sure if you send it in or you just go over it over the phone. But right now, they're just outlining, hey, the plan has just rolled out, we don't know many details. Put this stuff together, and then over the next few weeks we'll let you know. You know, I guess that is positive, but again, some people probably need an answer a little bit faster.
WHITFIELD: OK. So...
MOULTON: If I could make a recommendation, you should try to do everything in writing. And you should try to do it, you know, via registered or certified mail. And keep an order trail. And know the name of the person that you spoke to, and make sure you get their proper contact information.
WHITFIELD: All right. Good.
All right, so...
HOLLEY: Can I add something to this?
WHITFIELD: All right. Real quick.
HOLLEY: If the property is worth $100,000 less than the mortgage he owes, then the lender is going to benefit by renegotiating the mortgage. Just because Steve can make the payment does not mean it's the best thing for him, even though I'm not in favor of defaulting on a payment either.
WHITFIELD: OK.
We're going to take a short break. We're going to talk much more on this.
So you get yourself out of trouble. So why, say some analysts, 20 to 30 percent of the people who actually get help maybe through this White House plan, they might find themselves in trouble again in the near future involving that same house?
(COMMERCIAL BREAK)
WHITFIELD: OK. We're going to try and button this all up now about the mortgage modification. What do you do? What are your options? What are your troubles and concerns?
Rob Holley, a realtor here in Atlanta, is with us again. Bob Moulton, a lender out of West Palm Beach, Florida. Steve Woodall, a homeowner in Tampa. Josh, with your e-mails, your questions, your thoughts.
Josh, what is really firing people up as we wrap up our hour?
LEVS: Can I just say quickly, every time we do that Brady Bunch shot, I've just been preparing the next question, and I'm always, like, zooming back into the picture. I apologize.
(CROSSTALK)
LEVS: Let's zoom right in here, actually. Get off of me.
I want you to see another one of the e-mail questions. A lot of people asking about the role of renting in this economy. I think this is a good one from Arturo.
They're now renting in Connecticut -- living in Connecticut. They're renting in Connecticut and renting the home they used to own back in Florida. Do they qualify for any assistance if they're not living in the home that they're most concerned about?
WHITFIELD: I think the answer is no, isn't it?
MOULTON: No, this has to be the primary residence. You have to be living in the home. It's your primary residence only.
LEVS: He's not just asking about the latest bill, though. There's no assistance at all in that situation right now? So far nothing?
MOULTON: Well, that would be non-owner occupied property. It would be investment property. So that homeowner would not qualify.
LEVS: OK. Great.
Let's go to this one from Jojo, who points out that she has only $56,000 on a home that's worth $380,000.
WHITFIELD: That's good.
LEVS: She's put so much into this home. And yet, she lost the job. Now she's facing the possibility of foreclosure.
WHITFIELD: No?
LEVS: And she always thought of this as being her savings. But she can't afford the little bit that's left.
WHITFIELD: Oh no.
LEVS: Isn't there anything for people who have achieved so much?
Bob, you must help her. You must help her. Give her an answer.
MOULTON: Well, I mean, if she only has a $56,000 mortgage on a $380,000 property, to qualify you'd have to be making about $20,000. So I don't necessarily know all the facts in this situation...
LEVS: Well, she has no job.
WHITFIELD: She has no job.
MOULTON: But is she eligible for Social Security? Is she eligible for unemployment? What other sources of income? I don't know her age. Things like that.
So you don't really need a lot of income to qualify for a $56,000 mortgage.
WHITFIELD: I've got some advice for her.
You find a roommate and you bring someone into that home, live with you in that house.
MOULTON: That's another -- absolutely.
WHITFIELD: Pay your rent so that you can make your mortgage. You do not want to lose out on -- I mean, really.
MOULTON: Don't want to lose that.
LEVS: We're concerned about her. I know. WHITFIELD: Yes. You don't want to lose out after making all those payments all the time. You're almost paid off on your home -- $50,000 and then lose it? No.
That's my advice. And I'm not -- you know, I'm not a money woman.
UNIDENTIFIED MALE: What about selling the house?
LEVS: This group of people will help you. This group.
Well, we don't want to see that.
(CROSSTALK)
WHITFIELD: OK. What's the next one?
LEVS: A lot of people asking geography now. They're saying -- and I think this is a really good example. This one is looking at Chapel Hill. Right?
"The only risk of buying in Chapel Hill is if the market starts to drop like the rest of the country. But I can't imagine that happening based on the last few years of data."
This is a real question a lot of people have. If you haven't been in the worst impacted area, good idea to buy now, or is your area next?
WHITFIELD: Yes, Rob, because the Washington, D.C., area have not dealt with the kind of diminution of property values like everyone else.
HOLLEY: Well, we're back to the same question of trying to guess the bottom.
WHITFIELD: Yes.
HOLLEY: And somebody, if you're going to buy, they're going to have to jump in and do it and get the $8,000 credit, and figure it's an asset like anything else. Find a great place to live that they love, and know that it's going to fluctuate in value up and down.
WHITFIELD: Wow.
All right. Next, Josh?
LEVS: All right, yes. We can get to one more here. I'll just read you the top of this one. I think it's interesting.
"Under President Obama's housing plan, can you get your mortgage loan modified if you are already in bankruptcy?"
I know we've touched on this concept, but a lot of people considering bankruptcy. How does that play out?
WHITFIELD: Yes. OK.
Bob?
MOULTON: I don't think so. I think you have too be current with your mortgage. You could be late on your mortgage, but I don't think the Obama plan is necessarily addressing people in bankruptcy right now.
WHITFIELD: Oh, but Capitol Hill kind of just did. Will that help, that, you know, the House already said, bankruptcy judges, you might be able to get involved with modifying those mortgages, and now the Senate is going to vote on it next?
How much would that help?
MOULTON: Well, this discussion, again, the devil is in the details. I haven't seen the details to it.
WHITFIELD: Yes.
MOULTON: But it's a move in the right direction.
WHITFIELD: OK.
Josh, what's next?
LEVS: I'll tell you what, I'm told we have a matter of seconds left. So here's what I'd like to do. I want to let everyone know, I'm going to talk with all of our guests right here after the show. I'm going to see -- a lot of you asking, "Is there a good Web site I can go to?"
Plug in my information that helps tell me what to do. I'll talk with all of them.
Let's zoom in quickly. I'm going to post it all right here on my Facebook page, Josh Levs CNN, right after we're done, in just a matter of minutes. Any more information, any links that might help you, we'll get it going there.
And obviously, thanks so much to all the guests.
WHITFIELD: And, of course, Hud.gov is also a location that you can get some answers.
And Steve, you're going to have to have the last word, because we're really concerned about you. We want you and your 4-month-old and wife to stay in your home.
Last question that you might have or concern, anything? You can button this whole thing up for us.
WOODALL: You know, I don't have any other questions. It's been very helpful. And we'll see what happens. We're just going to keep praying about it.
WHITFIELD: OK. We're going to keep tabs with you, because we want the best for you and everybody else who is in your situation.
Steve Woodall, thanks so much. Bob Moulton, out of West Palm Beach, and Rob Holley, here in Atlanta, and Josh Levs, of course, thanks to you as well.
LEVS: And any who wrote us.
WHITFIELD: Thanks to everybody who wrote, your iReports, your e- mails, all of that, keeping this discussion going. Thanks so much.
I'm Fredricka Whitfield. See you again tomorrow.
Coming up, stimulus package scams. Con artists using the veil of government to cheat you out of your money. You don't want that to happen.
The next hour of the CNN NEWSROOM with Don Lemon coming up after that.
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