No one expects to face foreclosure.  The truth is most homeowners in the United States only have to deal with foreclosure after losing their jobs, going through a divorce, suffering from an incapacitating illness or other such life events.  Unexpected events happen to everyone, even responsible homeowners.  However, once people fall behind on their mortgage payments, they will have to deal with the reality of losing their homes if they do not act quickly.

When homeowners receive notices of foreclosure from their banks or lenders after defaulting on their mortgages, they will have two main options:  allow the foreclosure to happen or pursue a short sale.  Before homeowners decide which option is most appropriate for their situation, they need to know the difference between short sales and foreclosure.

What is foreclosure?
Foreclosure occurs when a bank or mortgage lender decides to regain possession of a property after a homeowner has defaulted on his or her mortgage.  Once lenders move forward with foreclosure, homeowners must vacate their properties and surrender their homes.  The damage does not stop there as foreclosures will appear on homeowners’ credit reports and will lower their credit scores.

What is a short sale?
A short sale occurs when both homeowners and lenders agree to sell homes for less than what is owed on the homes.  The lenders accept the loss because it helps them avoid costs associated with foreclosure and homeowners avoid incurring damage to their credit reports.

Which is better?
At American Economic Solutions, we firmly believe that of all the options available, foreclosure is the worst for several reasons:

• You lose your home.
• Your lender may choose to file a judgment against you to collect your past obligations as well as costs related to the foreclosure.
• You will incur significant damage to your credit report for years to come.

With the cons far outweighing the pros, we advise you to steer free and clear of foreclosure and pursue short sales instead.  While you may think that short sales are extremely complicated, time consuming and strenuous, the truth is that when you work with our specialists, the process is very smooth and expedient.  Our short sale specialists will handle all of the applications, paperwork and work with your lender and make sure that things move along quickly.

Contact American Economic Solutions today to learn more about our effective short sale services!

Anytime homeowners are thinking about modifying the terms of their home loans, it is important that they work with a credible loan modification company for numerous reasons:

Experience. Most people do not possess the experience it takes to successfully complete the loan modification process.  In fact, the majority of people who choose do-it-yourself loan modifications never complete the process.  However, when homeowners work with experienced loan modification companies, such as American Economic Solutions, they are able to successfully modify their home loans and obtain favorable terms from their lenders.

Knowledge. The majority of homeowners do not the same level of knowledge as loan modification companies do.  Additionally, most homeowners are not aware of all the federal loan modification programs that exist or even how to apply for these programs, which is why working with a company that specializes in home loan modification is crucial.

Relationships. Homeowners usually do not have established relationships with their mortgage lenders, which can make it difficult to enter into negotiations or get the best rates on their home loans.  At American Economic Solutions, we have worked tirelessly to build relationships with large lenders, like Bank of America and ING, and our relationships always benefit our clients.

Time. Anytime homeowners choose to pursue mortgage modifications on their own, they not also waste a great deal of money, but also a lot of time.  However, when homeowners work with American Economic Solutions, they are often amazed at how quickly we are able to modify their loans and they avoid wasting precious time.

Rates. The primary reason homeowners seek loan modification is to lower their monthly payments and to reduce interest rates.  Yet, the vast majority of homeowners do know have the experience, skills or abilities to get the best terms possible and this is why working with a loan modification company is so important.  At American Economic Solutions, we have helped innumerable homeowners get the lowest rates on their home loans, reducing their monthly mortgage payments and helping them save a ton of money.

Need assistance with loan modification?  Contact our knowledgeable specialists now!



If you are a California homeowner who entered into a short sale or completed the loan modification process in 2009, chances are that you were very relieved to hear that Governor Arnold Schwarzenegger signed SB401.   This new measure was created to offer homeowners tax relief on mortgage debt that was forgiven through:

• Foreclosures
• Short sales
• Loan modifications

Before SB401 came into existence, homeowners throughout the state were exempt from paying taxes on forgiven mortgage debt.  However, they were required to pay state taxes on the supposed income they acquired through short sales, loan modifications and foreclosures.  Many people started to coin this revenue “phantom income” and thought it was unfair that they had to pay additional state taxes, especially after losing their homes and properties.

With the new measure, homeowners who filed 2009 tax returns did not have to pay taxes on the amount generated from the difference between their home sale prices and mortgage balances.  In order to be eligible for tax forgiveness, homeowners had to be Qualified Primary Residents and could not exceed $800,000 in indebtness or exceed $500,000 in forgive debt.

SB401 is a great win for many people in the state, including those who have filed for consumer bankruptcy and those who have completed or are considering short sales.  With SB401, people who decide to partake in short sales, or the Home Affordable Foreclosure Alternatives Program (HAFA), can do so without incurring additional tax consequences.  Now that these individuals do not have to worry about incurring a hefty tax bill, they have the freedom to make financial decisions that will suit their best interests instead of worrying about tax penalties.

If you would like to learn more about SB401 and how it can make the short sale process easier for you, we encourage you to speak with our knowledgeable specialists by calling 1-888-500-2632.  We would be happy to discuss SB401 with you and can provide advice on both short sales and loan modifications, ultimately allowing you to pursue of a course of action that is most beneficial for you and your family.

When it comes to the topic of loan modification, there tends to be a lot of fiction and little fact circulating, which can make it difficult for homeowners to understand their options.  If you are thinking about loan modification, this blog will be of immense help and has been created by our team of experienced, accredited and knowledgeable loan modification specialists:

Fiction:  You must be behind your mortgage to apply for loan modification.
Fact:  This is absolutely false and a popular misconception. In order to get your home loan modified, you do not have to be late on your monthly mortgage payments.  You simply have to prove to your mortgage lender that you are in danger of defaulting on your mortgage to initiate the loan modification process.

Fiction:  You can’t modify your home loan if you have received notice of foreclosure.
Fact:  Many people wrongly assume that if their lenders have issued notice of foreclosure, it is too late to pursue loan modification.  Yet, the reality is, you can still negotiate more favorable loan terms with your lenders and modify your home loan even after receiving foreclosure notices.  If you are successful with your loan modification, you can stop foreclosure and save your home.

Fiction:  You can modify your home loan on your own.
Fact:  While it is true that you can try to modify your home loan on your own, the fact is that very few homeowners have been successful when trying to seek loan modifications alone.  Many report that they found the process confusing, strenuous and complicated and most say they never completed their loan modifications.  For this reason, homeowners should always seek help from loan modification specialists instead of trying to get through the process on their own, which can cost them time and money.

Fiction:  Attorneys are best equipped to handle loan modifications.
Fact:  Attorneys are not the best choice for homeowners pursuing loan modifications.  Instead, homeowners want to work with a reputable company that specializes in modifying home loans, like American Economic Solutions (AES).  Our company is approved by the Better Business Bureau (BBB) and, unlike lawyers who claim they are loan modification experts, we can actually prove we are experts as we have successfully modified hundreds of home loans nationally.

If you would like to learn more about the facts surrounding loan medication, we strongly encourage you to contact our knowledgeable specialists by calling 1-888-500-2632!

One of the many questions that homeowners ask when they are on the verge of losing their houses is, “Will filing for bankruptcy stop foreclosure?”

The answer to this question is never easy to come up with because it depends upon the circumstances that are involved.  In some cases, the answer will be “yes” as many homeowners prevent foreclosure by filing for Chapter 13 or Chapter 7 bankruptcy.  Unfortunately, in other cases, the answer will be “no”.

After people file for consumer bankruptcy, an automatic stay is issued.  This stops creditors and collectors from calling people to collect debts that they owe.  However, this stay is only temporary and will only stop foreclosure for a short period of time.  Even more disheartening is the fact the mortgage lenders and banks can get around automatic stays by appealing to the court to issue lifts.  Once courts grant lifts, lenders will be free to pursue foreclosure.

You may be wondering how this is possible.  The fact is, a home is an asset that is secured by a deed of trust and your mortgage lender is allowed to ask the courts for relief from automatic stays because they financed the purchase of your property.  In order to remain in possession of your home and avoid foreclosure altogether, you will need to negotiate favorable terms with your mortgage lender.  You may also pursue loan modification or short sale by working with the team at American Economic Solutions as both of these alternatives could stop your foreclosure.

The bottom line is this, if you want to stop foreclosure, filing for bankruptcy is really a temporary solution and will provide short-term relief.  If you pursue bankruptcy, you will have to live with several consequences, such as having the bankruptcy on your credit report for up to 10 years.  Therefore, if you are facing foreclosure, it is to your advantage to consider all of your options by speaking with the specialists at American Economic Solutions.

If you are still seriously considering filing for bankruptcy, American Economic Solutions encourages you to work with our preferred partner, Scott Orona, an experienced bankruptcy lawyer.  Scott Orona has helped many homeowners get through the consumer bankruptcy process with little stress and in minimal time.  You can contact Attorney Orona directly by calling 619-306-7627 or by visiting his bankruptcy website:  http://www.sdbankruptcy.net/

Recently, Bank of America launched a new program called the Principal Reduction Plan.  According to the plan, people who have home loans with Bank of America and Countrywide and are 60 days or more late on their monthly payments may qualify for “earned principal forgiveness”.  Loans that qualify are, “pay option ARMs, prime two-year hybrid mortgages and subprime loans initially offered by Countrywide. Fannie Mae and Freddie Mac loans will not be eligible”. (Wallet Pop)

Essentially, the purpose of the new plan is to reduce borrowers’ principal balances and to help homeowners avoid foreclosure.  Bank of America promised that it would eliminate, “$3 billion in principal owed by thousands of severely delinquent borrowers who owe more than their homes are worth,” reports the Los Angeles Times.  Many say that the plan came into existence due to increasing pressure from the government for banks to reduce the number of foreclosures and offer assistance to needy homeowners.

“Modifications are better than foreclosure,” said Bank of America executive, Jack Schakett, during a media conference. “The time has come to test this kind of program.”

The new program is expected to launch in May.  At this time, Bank of America says that it has 1.5 million borrowers who are 60 days or more behind on their mortgages.  The bank claims that it will reach out to qualified borrowers, but warns that not all borrowers who have defaulted on their loans will qualify.  Wallet Pop reports that only, “45,000 customers will ultimately qualify for this program.”

Prior to the introduction of the Principal Reduction Plan, banks have tried to combat foreclosures by offering loan modifications.  However, during loan modifications, banks would traditionally lower interest rates, increase loan terms or reduce late fees.  Until now, banks have always been resistant to reducing borrowers’ principal balances.  After realizing that homeowners are considering leaving their homes instead of paying high mortgage payments, banks are being more aggressive and presenting solutions.

The Los Angeles Times says that, “If successful, the plan could become a model for other lenders.”  Should this happen, the fragile real estate market may regain some stability and the number of foreclosures in the United States could decrease – a great win for homeowners throughout the country.  With Bank of America daring to take this huge step and put homeowners’ needs first, it is only a matter of time before other financial institutions feel pressured to follow in its lead.

Read Full Articles:
How Bank of America’s Principal Reduction Plan Will Work (Wallet Pop)

Bank of America to Reduce Mortgage Principal for Some Borrowers (Los Angeles Times)

Up until recently, President Obama’s plan to counterattack the foreclosure crises in the United States was to keep homeowners in their homes.  Now, the plan has changed as the Obama Administration is looking to help homeowners sell their homes at a loss.  Under the short sale program, homeowners that have defaulted on their mortgages will get paid to leave their homes. 

In an article entitled Program Will Pay Homeowners to Sell at a Loss for the New York Times, author David Streitfeld writes, “This latest program, which will allow owners to sell for less than they owe and will give them a little cash to speed them on their way, is one of the administration’s most aggressive attempts to grapple with a problem that has defied solutions.”  Streitfeld also says that, “More than five million households are behind on their mortgages and risk foreclosure.” 

This alarming number prompted the Obama Administration to launch a $75 million mortgage modification plan, but the initiative was only successful at helping very few homeowners.  For example, in the month of October, 500,000 people tried to modify their home loans, but only 2,000 were successful at obtaining permanent loan modifications (New York Times).

With millions of homeowners in the U.S. on the verge of losing their homes, the government needs to take action or the crises will escalate.  It seems that the government’s response is the new short sale program, which is scheduled to begin on April 5, 2010.  Instead of trying to obtain loan modifications, homeowners will now be encouraged partake in short sales. 

The new plan is supposed to make the short sale process easier for both homeowners and mortgage lenders.  In the past, many homeowners complained that mortgage lenders and banks had made the short sale process an utter nightmare by refusing to accept offers from buyers.  Now, banks will be asked to accept offers, even if they are for less than what they expect.

The program has many benefits for homeowners and communities.  For example, homeowners will not have to worry about incurring damage to their credit ratings because they will avoid foreclosure.  Communities will have less foreclosed properties and instances of vandalism.  Yet, even though there are many pros and a short sale boom seems eminent in 2010, lenders are wary and anticipate fraud.  They also do not want to sell properties at a loss.  To them, it is just bad business and the program presents great risks.

At American Economic Solutions, we think that it is about time that the government passes an initiative that addresses the issues homeowners are confronted with in this tough economy.  So much has already been done to help banks and lenders.  Now it is time to focus on what the middle-class needs, better foreclosure solutions and compliance from mortgage lenders.  We are very excited about the possibilities the new short sale program presents and are looking forward to helping homeowners avoid foreclosure.

If you pay your credit card bills before your mortgage, know that you are not alone.  According to a recent study released by TransUnion, consumers are choosing to pay off their credit card debt before their mortgages. 

Sean Reardon, a consultant with TransUnion and the creator of the study says that, “Conventional wisdom has always been that, when faced with a financial crisis, consumers will pay their secured obligations first, specifically their mortgages.” The study revealed that the number of Americans that chose to pay their credit card bills over their mortgages increased by 68% from 2007 to 2009.  Two states that clearly show bill payment hierarchy are Florida and California (Bills.com).

The team at American Economic Solutions feels that while it may seem like paying your credit cards first is a wise option, it can lead to much greater problems in the long run.   Whenever homeowners stop paying their mortgages, mortgage lenders move quickly to issue foreclosure notices.  And, the reality is that dealing with a foreclosure can be far more strenuous than dealing with a credit card collector.  What is more frightening, receiving calls from creditors or losing your home?  Give this some thought before you skip a mortgage payment.

There are certain things in life that must take priority over others.  At AES, we consider housing and transportation to be more important than paying down credit card balances.  If you find that you are in a compromising situation and cannot afford to pay both your mortgage and your card bills, you should always pay your mortgage first.  You should also seek immediate help from our debt management specialists.  Every day, we meet with individuals who are overwhelmed by debt.  Our team works with our clients to come up with feasible solutions that often prevent foreclosure and enable them to regain control finances.  

If you are struggling with debt, don’t hesitate to get the help you need to reclaim control of your life.  Contact us today to speak with a knowledgeable debt management professional!

On February 8, the California section of Real Estate Rama posted an article entitled “New Research Shows Red-lining in Five California Cities”.  According to the article, predatory lending is hitting cities in California that have a high Latino or African American population.  The article, which cites a report by the California Reinvestment Coalition, asserts that many banks have failed to prevent foreclosures and that there is a high denial rate for home loans amongst the Latino and African American populations.

The report produced by the California Reinvestment Coalition examined the practices of banks, including large mortgage financiers, in five California cities over the past three years.  The cities surveyed were:  Los Angeles, Oakland, Sacramento, San Diego and Stockton. 

After the study concluded, the California Reinvestment Coalition discovered that there were a high amount of predatory home loans and defaults, specifically within the Latino and African American communities.  The study also revealed that the amount of loan modifications and new prime loans were very low compared to other ethnicities and neighborhoods.

The report from the California Reinvestment Coalition brings to light four main points.  First, mortgage lenders in California have saturated communities with high-cost predatory loans.  Second, a large number of foreclosures have resulted from predatory lending practices.  Third, the majority of mortgage lenders are not working with families to prevent foreclosures.  Finally, mortgage lenders are denying home loans and loan modifications to a high number of applicants in the Latino and African American communities.

Kevin Stein, associate director of the California Reinvestment Coalition, said, “The data confirm what we have heard from housing counselors and borrowers—that banks aren’t meeting their commitments to help families stay in their homes, and that this is further destabilizing California communities.”

At American Economic Solutions, we feel these are bad banking practices that must be stopped immediately.  With the number of foreclosures already being so high and California’s staggering unemployment rate, we find it disconcerting that banks are choosing to deny select communities credit. For too long, mortgage lenders have been taking advantage of homeowners’ lack of knowledge. A lot of these mortgages were issued while homeowners were under duress and looking for options. 

The reality is, the government has been taking care of the banks, but banks are not taking care of homeowners. Lenders received billions, if not trillions, in assistance from the government.  Historically, lenders have been very conservative, but they very liberally took the government’s money.  Instead of passing the savings and money onto homeowners who need it the most, they pocketed it, leaving countless people homeless and economically devastated.

Read full story from Real Estate Rama – California….

One of the biggest challenges homeowners are facing in today’s economy is paying their mortgages.  Last year, over 2 million individuals in the U.S. went through foreclosure (RealtyTrac) and in 2010, another foreclosure wave is expected to hit consumers.

Due to the overwhelming amount of foreclosures, many homeowners are pursuing alternatives in order to keep their homes.  One of leading alternative is loan modification programs.  While loan modification programs are known for helping consumers lower their interest rates, increase loan lengths, eliminate penalties and make lower monthly mortgage payments, the sad reality is that many loan modification programs are offered by fraudulent companies that make money y taking advantage of homeowners.

At American Economic Solutions, we know that loan modifications are a viable option for homeowners, but we also know that if homeowners work with the wrong company or fall prey to predatory mortgage lenders, agents or attorneys, they may wind up in worse predicaments.

Therefore, it is important that homeowners work with a loan modification company that:

• Does not charge upfront fees.  At AES, we charge zero advance fees for loan modifications.
• Is legally compliant.  American Economic Solutions is not only legally compliant, but also SB94 compliant.
• Has years of experience.  The AES team has over 20 years of finance, mortgage and real estate experience.  Some of our team member have Department of Real Estate licenses in multiple states and are Certified Mortgage Planning Specialists.
• Has great standing with the Better Business Bureau.  AES has an upstanding history with the BBB.

These are all qualities that American Economic Solutions has.  At AES, we aim to keep our clients in their homes by offering dependable loan modification programs that are effective and ethical.  Contact us today to learn how our loan modification programs can help you save your home.

For more tips on finding the right loan modification company, check our recent article on eHow.