The Advantages Of A Home Loan Modification
December 9th, 2011 by Rick HartMaybe a monetary hardship has made it tough to stay abreast of your home loan. This is when a homeowner wishes an answer to keep from losing what they have been working so long to keep. This is when the idea of a home loan modification comes into focus and opens a door to saving your house. This may be help when a major financial situation makes it difficult to stay current with your payments. It can often help you avoid foreclosure.
There are many ways in which a person can be saved from monetary chaos during hard times. The first and best way is to you reach out to your lender prior to getting behind on your payments. Maybe they can offer options that gives you a better way of keeping up with your payments. Maybe a loan modification can be organized.
A loan modification is a contract that changes the first terms of the loan. This can help to change the loan in a way that gives both parties a technique to get what they desire. The borrower gets easier payments and the bank gets paid and avoids the sticky process of having to foreclose on the property. It can open the door to a positive resolution that meets both parties wishes.
A loan modification is done ideally when the lender and the borrower are in the contract. Naturally the lender will try to organize the accord in their favor. It may be good to get the help of an attorney who understands loan modification at this time. You may be sure the lender will have one.
Having legal council can cost in the short run but it can avoid a rather more frustrating battle that might be faced by the homeowner. Their home is often their biggest investment so intelligent negotiation is only logical. A good loan modification attorney can be worth their weight in gold… sometimes literally.
A loan modification is a smarter choice for those who want to save their relationship with their lender. It is best to try this because it shows that the borrower can handle their debt in a logical way and is anxious to really pay of the loan.
Some of the loan arrangements that can be modified include:
– There can be a reduction in the IR that is being charged on the loan.
– The rate can also be altered from a floating rate to a fixed one. These little permutations can change the dynamics of the agreement between the borrower and the lender.
– There can also be a reduction in the principal that's owed, or the original amount of the loan.
– Penalties or late penalties can be reduced or relinquished by the bank so as to help the borrower to pay the debt off. The concept being to lower costs so as to permit the borrower to catch up in their payments.
– The term of the agreement can be modified also to allow homeowners the opportunity to rebuild their monetary standing with the borrower. By expanding the time of the loan, the borrower can have a decent chance to catch up on their debt and save their monetary status from being trashed.
The agreement can also have a once a month cap on the payments and payments can be interlinked to a share of the household earnings. In these types of circumstances, the borrower can be in foreclosure, bankrupt, or in other finance statuses at the time so long as they can handle the modification.
Many of those programs fall under Fed. and government departments that structure these standards to change the contract. The government’s Affordable Loan Assistance Program and the concomitant website has many ideas concerning how to stay in your house and avoid foreclosure when your financial situation changes. The site is http://www.makinghomeaffordable.gov and offers many suggestions on the best way to tweak your loan.
A loan modification is a good way to ease the monetary stress of the homeowner so as to pay off their funding source. The bank also gets what they want. Taking positive steps and maybe reaching out to a loan modification solicitor is a great way to reduce the stress of a fiscal hardship and not lose your house. But the key's to act quickly before things get out of hand.
Rick Hart is an internet business consultant. He provides tools for foreclosure lawyers in Tampa that help with loan modifications.
Mortgage Assistance: Assistance For You
October 13th, 2011 by John RoneyYou are qualified for mortgage assistance but you don’t know how to fill out the paperwork in order to get approved. This has happened to many homeowners who have walked away from their homes, very disappointed, because they did not know how to properly fill in the forms required for mortgage assistance programs.
These are good people who want their piece of the American dream. They want to enjoy the security of their home. They want to improve their home, both for their own comfort and value purposes. They want to be good stewards of their property and valued members of their community. Sometime these good people find themselves in need of mortgage assistance.
There has been a great deal of talk in the news about people who are seeking mortgage assistance. Some media report that people are seeking to take advantage of these programs, merely to hold onto second homes or vacation homes. However, a look at numbers estimated from multiple sources, both public and private, reveals that almost seventy percent of homes in the United States are occupied by their owners.
There has been a great deal of talk in the news about people who are seeking mortgage assistance. Some media report that people are seeking to take advantage of these programs, merely to hold onto second homes or vacation homes. However, a look at numbers estimated from multiple sources, both public and private, reveals that almost seventy percent of homes in the United States are occupied by their owners.
There is no need for the homeowner to worry. Instead it is best to get a loan modification attorney who can help with whatever programs that are available. The federal government has put into motion several programs that will help to save the homeowner from losing their homes in foreclosure. The programs are effective and the homeowner who qualifies can apply before they are even faced with a foreclosure notice. The important part for the homeowner to remember is that all the paperwork must be completed and approved before they are actually on the new program.
Learn more about Obama Mortgage Relief Plan Qualifications.
Mortgage Loan Modifications: Tips to Get Approved
August 19th, 2011 by Ken MelblockHome values will continue to fall as long as supply exceeds demand. In California, based on the Notices of Default already recorded, lenders will probably take back more homes in October at foreclosure auctions (30,000+) than the total of home sales in the state, and that is likely to persist at least until March of next year. Obviously, that will be disastrous for home values. Mortgage loan modifications could prevent many of those foreclosures and prevent all those homes from being added to the inventory overhang. A loan modification is a unilateral change of the terms of the Note by the lender. In the many cases where the homeowner cannot make the current payment, but COULD qualify for a lower payment, loan modifications are BY FAR the best workout solution because they keep families in their homes, they cost the lender a LOT less than short sale or foreclosure, they keep those homes off the market, and they don’t cost the taxpayers a dime.
Each successful loan modification puts us one house closure to the end of this crisis. As of this writing in mid September 2008, loan servicers acting on behalf of the investors have become much more accommodating with regard to loan modification requests, but the process is still too slow and too cumbersome. Three important steps need to be taken in order to clear the way for rapid modification of those mortgages that can still be saved, and now that Congress has authorized the Treasury to buy bad mortgage loans from the lenders, Congress should ensure that these steps are taken immediately:
First, there needs to be a national legal shield that allows servicers to modify loans without concerns about liability to their investors as long as they are fulfilling their fiduciary responsibility to the investor to maximize the value of the asset. This needs to be combined with incentives for the servicers to take that action quickly. That is already in place with regard to certain subprime loans due to loan modification guidelines published last year by the American Securitization Forum. Those guidelines need to be universal, and widely promulgated. Secondly, the “moral hazard” argument needs to be completely debunked. It’s time for solutions, not blame. There is plenty of blame for everyone. The “moral hazard” argument says that if homeowners are given a break it will encourage inappropriate risk taking by other homeowners in the future. This easily dealt with through realistic underwriting guidelines which are certain to be imposed by the market as long as investors are clear that the government will not bail them out. Fortunately, that is already occurring.
Other than correct filling, you also need to ensure that you the information you give is the truth. You should not hold back any information because of feeling embarrassed. Such information as inability to pay bills is crucial when the form is to be approved.
The most crucial tip is that you need to work with loan modification agencies that have a track record of successful applications. This way, you will increase your chances of getting the modification applications approved. And do not forget; the majority of loan modification companies will offer free of-charge seminars which basically mean you do not stand to lose a thing.
Learn more about Obama Mortgage Relief Plan Qualifications.
Making Homes Affordable Refinance: Will it Affect Your Credit Rating?
August 16th, 2011 by Ken MelblockGetting a bank loan modification could be the solution you need to stay in your home, especially if you fall in that middle ground where you can’t qualify for a refinance and don’t meet the standards for the federal programs under the new Making Homes Affordable Refinance Plan. A bank loan modification may not afford the same payment reductions and tax breaks that one under the federal program would but it could very well keep you in your home.
First you need to know who insures your loan. This is not something that people commonly know, usually you don’t even need to access this information, so don’t stress if you don’t have this information immediately. All you need to do is phone Chase Bank and ask. You are in luck if it turns out your insurer is Freddie Mac or Fannie Mae. A $75 billion government loan modification program has recently been developed for those with Fannie and Freddie loans that is meant to help homeowners survive this recession by modifying their monthly payments so they are reduced to just 31% of gross monthly income.
To see if you qualify for a bank loan modification you would need to meet with a bank or send your financial information to a bank of your choice. You would need to include proof of your current income, all of your monthly expenses, your mortgage history and a letter of hardship that explains the details of your current situation. Once approved, the specifics of what will be modified in your loan will be explained to you.
Often times a simple reduction in the interest rate on your loan is all that is needed to get you a payment you can afford. Spreading your balance due over an extended period can also help you to make your payments on time. The many options that exist for you will be explained by your banker. While government programs can offer better deals and tax breaks and perhaps be more profitable for you in the long run, not qualifying for one does not mean the end of the road for you. A bank loan modification can be the difference between losing and keeping your home. Taking that first initial step of calling your bank and getting some basic answers could be your first step to financial relief.
Contrary to popular belief, not all banks are dishonest and greedy. It is in the best interest of all banks and mortgage companies that you stay in your home and pay your mortgage. There are not enough buyers to recoup losses from homes that have gone into foreclosure. If your circumstances show that you need help, a loan modification will keep you in your home and the bank in business.
Learn more about Obama Mortgage Relief Plan Qualifications.
Obama Home Affordable Program: Obama’s Loan Modification Program Can Change Your Life!
July 31st, 2011 by John RoneyYou might feel like your finances are spinning out of control right now as you struggle to meet high mortgage payments. But the good news is that you can take control of your situation by finding out if you qualify for Obama’s loan modification plan and then submitting your application correctly. Since the program features standard guidelines for approval for everyone, you can take advantage of some upfront knowledge, learn those guidelines and then pre-qualify yourself. Here are the basics of the Obama home affordable program that Obama is offering to borrowers facing a financial hardship situation.
Within the early stages of this loan modification plan, many people were already bailing out of their mortgages by the thousands and leaving lenders with a bad taste for helping America’s homeowner at all. On the other side, with money already being given to these large corporate banks, holding companies and investment companies, most American’s were already losing their faith in the companies who handle, negotiate, process and finalize their loans.
Gross (before any taxes or deductions) monthly household income x 31% = New Target Payment
Target Payment MINUS monthly property taxes, monthly homeowners insurance, monthly homeowners dues principal and interest target payment. Now, can you reach that new payment by using the standard methods of modifying your loan as set forth by this federal plan? Your bank will use this same method of determining if this is possible for everyone who applies. Once you learn the method, you will know how to pre-qualify yourself and know if you need to make any adjustments to your budget ahead of time.
The reports of the housing industry’s downfall, came on the heels of homeowners being served with eviction notices, while still other people were ultimately defaulting on loans that had sky-rocketed to momentous proportions. This grand scheme of Obama’s loan modification program came into the light as a way to use federal money, up to the tune of 9 million dollars to help lenders adjust and modify their client’s home mortgages. How sad to see the Federal government bailing out these same companies that were looking for their own skins to be saved, while still closing down on the necks of the American people they were set upon to make loans to.
The Complete Loan Modification Guide will take you step by step through calculating your debt ratio, completing the financial statements, writing your hardship letter and then putting it all together to submit to your lender. Learn how to apply and qualify for the Obama federal program too.
Learn more about Obama Mortgage Relief Plan Qualifications.
Obama Home Loan: Home Loan Refinancing and Modification
July 26th, 2011 by John RoneyMortgages backed by either Fannie Mae or Freddie Mac are now eligible for a modification by using President Obamas “Making Home Affordable” plan. Obamas plan will allow a homeowner with a home loan backed or financed by either Fannie Mae or Freddie Mac to get a Obama home loan mortgage modification into a 4% fixed rate loan. Here is what you need to do to take advantage: Here are some of the requirements and key points to President Obamas housing bailout stimulus plan:
There are several grants, tax credits and loans available in this scheme. You must locate one for your self. For that do loads of research. Go through the government websites properly. You can get a personal loan to repay your debts and save the home. he earlier clause of 20% equity holding for the home owners does not stand any longer. Now when your mortgage amount exceeds 105% of the home’s current value, you can apply for Obama home loan modification or a refinance.
The plan also requires the participating banks to reduce the interest rates on the home loans lent out, so as to reduce the monthly loan payments to no more than about thirty eight percent of the net monthly income of the concerned borrower. The government is then expected to invest and to further bring down this figure to thirty-one. To accomplish this, the banks are to reduce the interest rates to a mere two percent and if still the desired amount is not achieved, then increase the term of the loan to forty years.
The only homeowners who have a mortgage from Fannie Mae or Freddie Mac who will not be allowed to use President Obamas “Making Home Affordable” plan are homeowners who have declared bankruptcy. There are other new Government backed programs and housing grants which can help you.
They also present your case in front of the bank in the best possible manner. Further they also give you financial counseling to manage all your expenses properly. The banks are very liberal to loan modifications & refinance after the Home Stimulus Package.
Learn more about Obama Mortgage Relief Plan Qualifications.
Obama Refinance Mortgage Plan 2010: Loan Modification Offers Hope to Keep Us in Our Homes
July 21st, 2011 by John RoneyOver a million of loan modification applications have been approved by participating lenders, preventing borrowers from going through hassle of dealing with foreclosure. The sad truth is that many more applications were denied, mostly due to simple mistakes or filing errors. What many people do not realize is that loan modification denial most commonly happens due to their own fault, as they fail to comply with guidelines set by Obama refinance mortgage plan 2010 , do not properly communicate with their lender, or make other mistakes that could have been easily avoided.
A number of studies have revealed that an unexpectedly high number of failures under HAMP were a result of inefficient modification application processing. Lenders were simply not approving consumer applications in time needed to avoid foreclosure. Many families, eligible to get loan modification, were forced to go into foreclosure due to lender processing times. As a result, president Obama issued a directive to lenders to expedite review process for loan modification under HAMP. New Rules Enforce Strict Timeframes for Lenders- Under new rules, loan modification decision should be made within 30 days of customer application receipt by lender.
The following mandatory guidelines are now strictly enforced by the government: A lender must produce a written confirmation of a loan modification application within 10 days of application receipt. A final decision of approval or denial of benefits available under HAMP should be made by a lender within 30 days of application receipt. Upon successful application approval, a 3-month trial should be given to borrowers. If the trial is successful, loan modification will become permanent without need for additional paperwork.
President Obama’s loan modification plans involve a process by which lenders modify existing loans, thus giving homeowners lower interest rates, and allowing the monthly payment to decrease, without them needing to refinance their existing loans. This loan modification plan is contingent on homeowners having kept their payments current and not going into default.
Online HAMP Resources Are Free, Yet Effective- Finding loan modification help today is easier than ever, as there are a number of trusted resources offering help free of charge or for a nominal fee. Most of them may easily be found online. Many HAMP assistance resources are nonprofit organizations, offering free consultations to everybody interested in loan modification. Experienced professionals will be able to discuss your individual situation, advice on further steps to be taken, and offer guidance throughout the process. They may not only speed up the application processing, but also greatly increase your chances of approval.
Learn more about Obama Mortgage Relief Plan Qualifications.
Mortgage Modification in 2011
July 16th, 2011 by Mike RockwoodJust last year we’d spend way too much time with our clients trying to determine whether or not they qualified for a mortgage modification. In 2011 it takes me just a few minutes and is about 100% accurate. That’s because the banks, in their rush to streamline, have become standardized and predictable.
Standardized – The Making Homes Affordable Program (MHA) Guidelines have become the standards. Other programs are modeled after the MHA. None of the other programs are as rich and all are harder to get. But the guidelines have become universal.
Predictable – The sheer numbers of applications has forced the banks to routinize everything – including erroneous rejections – to a point where it is pretty obvious to us veteran loan mod freaks.
Homeowners will get a mod if they, 1) have a typical hardship, 2) the loan qualifies (non-jumbo, done before Jan. 1, 2009), have correct ratios, 3) live in the home, and are in default. That’s not to say that landlords are SOL…they just have less likelihood of approval and must have lower expectations.
Don’t mistake qualifying with getting approved! Thousands of qualified applicants get rejected every day! Being qualified is just the beginning of the journey. You have to know how to navigate this bureaucratic, convoluted, administriviated maze (don’t bother to right-click – I made up that word!). You can’t do that with advice crafted for the masses – advice you get from the banks themselves or from the government. You need to get advice from a source that has actually succeeded in getting through the maze – time and again.
That’s why you need to have the insider, street-smart advice of someone who has “been-there” and “done-that”. If you follow the advice of the government or bank sponsored entities well, you just get plain vanilla – good for the masses- kind of advice. You need much more if you hope to get to the front of the line and actually cash in on some of this relief. So, don’t be nave. Get advice from the trenches. You’ll have to pay for it – but, hey, you get what you pay for. Do it!
Interested in street-smart tips on Mortgage Modification? Visit Rockwood’s site about DIY Loan Modification at Home Loan Modification
Home Mortgage Loan Modification: FHA Home Mortgage Loan Modification Or Refinancing
July 13th, 2011 by John RoneyHomeowners have been scrambling to apply and meet federal loan modification qualifications but most to no avail. Many experts have been wondering whether this has it been a complete waste of time for these consumers and will they ever actually see the funds they so desperately need? Most economists will say that all is not lost. Well, for those who share this optimistic opinion about these federal programs, here are some proven ideas that may actually help increase your chance of being approved and funded.
Here is how it works, and how to use it with Chase:Right now, refinancing or home loan modification is easier and more beneficial for a homeowner than it has ever been before. Chase has mortgage professionals and locations across the country dedicated to helping homeowners. Foreclosures, mortgage defaults, and financial hardships are all problems that can be solved by using the Obama stimulus plan with Chase.
Communication Is Important – Get into the habit of calling your contact every week to check on the status of your file. This would be a good time to discuss any documents they are reviewing or in question. Many times, changes occur during the application process so make sure you always discuss this with your mortgage servicer which will prove invaluable. Remember To Be Persistent – No one told you that this loan modification process was going to be easy. That’s why it is so important to submit documents when asked even if you already submitted them. Getting mad or arguing will not help matters. Being professional and proactive may end up getting you approved ahead of others who are not so accommodating.
Now let’s share some more tips from those who are sitting across from you or are on the other end of the phone in helping the loan modification become a reality. They include: Make Sure You Are Flexible – You first have to realize that not everyone applying will qualify for the H.A.M.P. loan modification program. There are guidelines that must be followed which will require you to submit a full documentation so do not argue or slow things done by not following these non-negotiable requirements.
Homeowners right now should look into refinancing or mortgage modification with Chase. It has never been easier to save hundreds of dollars per month simply by calling them and asking about President Obama’s mortgage stimulus plan. Odds are you will be approved and start saving hundreds next month.
Learn more about Obama Mortgage Relief Plan Qualifications.
How You Can Find Help Prior To Home Foreclosure
April 8th, 2011 by Leslie K. BridgesFor homeowners, the notion of foreclosure is scary. No person wants to have their house taken away. Regrettably, such things happen to many homeowners as a result of debt. That is the reason why it is a good plan to get help prior to foreclosure. This help can come in several forms. It could be creating good spending habits, declaring bankruptcy, or talking to your lender and working out a debt settlement plan. Any of these alternatives is much better than foreclosure, but several options are far better than others.
The best option is to just fix your spending habits. Having said that, this only is effective if you’re not too much into debt. If you can still pay off your debts, the best help before foreclosure is to budget, and stop using money you don’t have. A budget is a great way to insure you do not become deep into debt, because you keep a record of every penny spent. If you get in debt, but you feel you can still get out of it if you act immediately, quit spending, and start budgeting. This may save you from foreclosure, because you will manage to eliminate your debts as a result of budgeting.
If you’re too much into debt for budgeting, debt settlement is the next most effective choice. Settlement requires talking to your loan provider, and working out an agreement that allows you to remain paying off your debts at a reduced cost. This is a great means to lessen the stress from debt, simply because it still makes it possible for you to pay off your debts, but it’s much easier.
If you feel this process works for you, the 1st step is to compose a letter to your bank. Within the letter, describe your circumstance, but don’t get into excessive detail. If you have a legitimate reason, there’s a good possibility settlement will work for you.
If you are too much in debt for either of those options, the last option is Chapter 13 Bankruptcy. This will enable you to erase your debts, and enables you to maintain your home until you have developed a strategy to pay off your debts. If you wish to utilize this method, you need to file a petition.
After you’ve submitted the petition, it’ll take a few weeks to obtain approved. If it gets approved, your home will be secure till the hearing. For the hearing, you’ll need to have a strategy which will allow you to pay off your debts and return on your feet.
For advice on your citimortgage loan modification, check us out at best loan modification companies.
Loan Modification, Bankruptcy Avoid Foreclosures & Save your Home
January 30th, 2010 by adminThe economy is facing recession and with it comes the struggle to keep up with the monthly mortgage bills. In such a case the strategy and ability to protect your home from foreclosure depends on where you are on the foreclosure timeline which one should be aware of to avoid foreclosure. The foreclosure timeline is-
When a borrower has missed several months of mortgage payments (generally about three months) the lender files a Notice of Default with the county recorder. The NOD identifies the default amount and the date by which the borrower must pay off the default.
When a Notice of Trustee Sale is sent after 90 days has elapsed after the NOD is filed when the lender has the right to file a Notice of Trustee Sale. It is done 20 days prior to the sale. It contains the date, time and location of the sale and posted on the property and in public location as well.
When Trustee Sale Auction held at the place and time as mentioned in the Notice of Trustee Sale. The successful bidder receives a trustee’s deed to the property once the sale is completed.
Now when you are aware of the time line, it is important to ascertain and come to a conclusion on saving your dream home from an unfortunate foreclosure. The most obvious way to save your home is to work out a mutually beneficial payment plan with your lender, or to revise the terms of your original loan agreement in order to make manageable mortgage payments to your lender. Lenders can help you out in the loan modification process but it can be frustrating for the borrower due to pressure of work on the lender. In such a case online law firms looks at all of the aspects of your loan agreement and gives you the best possible leverage when negotiating the terms of your loan with your lender.
Borrowers can also feel protected from engaging in unfair lending practices through a number of federal laws. Borrowers can be the victim of predatory lending practices without even knowing a bit about it. In such a scenario, a forensic loan audit is done on the original loan documents and if you have been a victim of predatory lending, you may have the right to file a lawsuit against your lender and to put a stop to the foreclosure process for the duration of the suit.
The next best option is to declare Bankruptcy which puts an immediate stop on the foreclosure process, hence providing with an opportunity to start fresh on your finances. It is the solution that you can resort to when you are the facing the difficulty in paying your monthly mortgage bills and getting into additional debts. The solutions are, therefore attainable to enter into a loan modification process and working out on a mutually beneficial payment plan, protection from predatory lending practices on the part of the borrower and declaring bankruptcy in order to avoid foreclosures. Online law firms have expert attorneys who specialize in loan modifications and foreclosure prevention to help out in moments of recovery.
Verified Loan Modification Results
January 23rd, 2010 by adminA retiring Chicago city employee had her home loan with CitiMortgage modified to 2 percent on a 40 year amortization and granted a two month payment holiday to rebuild reserves. Her husband has social security and a small pension but She was facing a large drop in pay as her retirement date of June 30, 2009 was fast approaching.
She would be receiving a pension at only 40% of her prior pay and she didn’t have enough social security quarters to draw her own benefit. They had never been late on their mortgage so making a case for not being able to afford it might look opportunistic. I was very reluctant to take on this client because 31% of their future combined income was so low that I just couldn’t imagine CitiMortgage coming through for them so I advised that they try to sell the property while I made their plea for Making Home Affordable (MHA) with CitiMortgage.
They had listed their home with a local realtor and weren’t able to get any bites even at what they owed so this was a scary situation all the way around. I have only the highest regards for CitiMortgage loss mitigation department because they were willing to work on preventing a train wreck rather than watch idly by. This was a fairly aggressive loan mod application because our client maintained her perfect credit and headed off future problems by contacting us in advance of her drop in pay. See www.illinoismortgagemods.com to read more typical results.
A St. Charles residential contractor gave up on waiting for building to rebound and retired to a small carpentry pension and social security. I prepared his Chapter 7 bankruptcy so that he could strip away all his other debt and try to hang onto his home. I then submitted a mortgage modification request to Chase/EMC and they very generously modified his subprime loan into a prime loan and cut his payment by 50%. There is now no question he will be able to afford the payments going forward and enjoy retirement as a homeowner.
Feldman Law Center – Home Loan Modifications as Homeowners Best Option
January 20th, 2010 by adminFeldman Law Center – News by Feldman Law Center – For all the negatives that have been written about loan modifications, and there have been a lot, the option is far and away the best option for struggling homeowners trying to stay in their homes and preserve their credit scores. As property values have plummeted, the possibility of selling or refinancing the home has been erased. That leaves foreclosure, a short sale, or short refinancing as the remaining options outside of a loan modification for homeowners to resolve their issues with their lenders. All of those options do extreme damage to credit scores and stay on the homeowners’ credit report for a minimum of seven years.
A home loan modification is basically a change in the terms of a homeowner’s existing mortgage with the objective of bringing the monthly mortgage payment back in line with the homeowner’s current financial situation. By modifying the existing mortgage, the transition doesn’t affect the credit score of the homeowner. Additionally, the credit score of the homeowner does not carry much weight in the modification process.
A home loan modification’s main feature is normally the alteration of terms on the existing mortgage’s first five years. It’s not unheard of for modifications to alter terms for the life of the mortgage but most of them cover the first five years. It is hoped by all that conditions in the economy, real estate values, and the job market improve enough by that time that homeowners will either be able to sell the property or afford payments at the higher levels that go into effect once the modified rates revert back to their original levels. The modification benefits the lender by keeping the homeowner in place, which results in continued cash flow from the property, and by preventing the property from going into foreclosure and back on to the books of the lender.
As simple as the process has been made to sound here, the negotiation of terms on a mortgage is not in the normal purview of a homeowner. Hiring legal representation is the best way for a homeowner to ensure that will get the best results possible for their personal situation. An attorney will base the negotiation for the loan modification on the homeowner’s total financial picture, including credit card and consumer debt. Where it makes sense, the firm may initiate debt negotiations, along with the home loan modification, on the other debts carried by the homeowner including credit cards, revolving debt, consumer loans, unpaid medical bills, etc.
The law firm will also assist in the drafting of a hardship letter, which details the conditions of the challenges facing the homeowner. Hardships can include an adjustable rate mortgage with payments that have increased to the point where they are out of reach of the homeowner, pay cuts, job losses, illness, or divorce. The hardship letter should also include the homeowners plan for dealing with and getting past the current hardship. From that point negotiations begin, the ultimate prize being the modification.
If you are struggling with your mortgage payments, are behind on payments, and/or facing foreclosure, talk to an attorney’s office that specializes in home loan modifications. The Feldman Law Center has executed over 600 loan modifications and has the experience and knowledge to get the best possible results to address your specific needs. Call them today at (949) 544 8224.
Bob The Homeowner Versus Net Present Value
January 17th, 2010 by adminA little known aspect of the Obama Administration’s “Making Home Affordable” plan is the “Net Present Value” test which essentially determines whether a loan modification or a foreclosure and sale will provide a better return for the investors behind the mortgage in question. The calculation takes the proposed monthly payment in a home loan modification and multiplies it over the life of the loan (payment x 12 months x 30 years). If that total comes in above what a sale and foreclosure would yield, the calculation would favor a modification. If it falls short, the calculation would lean toward foreclosure and sale.
Foreclosures in many scenarios will favor the investors while a modification often works to the advantage of the servicer. For the investor, a foreclosure and subsequent sale may result in a loss of principle but money coming back to the investor can be re-invested in other vehicles which can provide yield and returns. The disadvantage for the servicers is that, without monthly payments from the property, they lose the fees they were able to charge the investor for handling the payments, billing, and communication with the homeowner. A loan modification, on the other hand, benefits the servicer by keeping the payment stream, and the fees they can charge on it, alive. The modification hurts the investor by forcing a mark to market valuation which reflects the loss on the mortgage (also known as a haircut) due to a lower interest rate and, if applicable, a reduction in principle.
The third party in the game is the homeowner (Bob) applying for the loan modification. It’s likely that the homeowner has heard of “Making Home Affordable” and is very aware of the 2% interest rates that were part of the headlines generated by the plan. Naturally, that’s the rate he wants. Unfortunately, getting Bob a 2% interest rate is not in the interest of either the investor or the servicer of his mortgage. For the investor, the lower the interest rate goes the bigger the haircut. Memorializing it in a modification will turn a theoretical haircut into an actual loss on the books. For the servicer, an interest rate at that low level can push the NPV score to a point where the test favors foreclosure over modification. If Bob’s property isn’t considered a lost cause it’s extremely unlikely that he’s going to see anything close to that 2% rate.
One of the other variables is Bob’s commission based income. His payments are going to be capped at 31% of his average monthly income, which has dropped considerably. In fact, it’s dropped so much that even by maxing his payment out at 31% of his monthly pay he falls below the estimated foreclosure and sale score. Conditions dictate foreclosure according to the net present value test.
The investor, seeing a score that clearly calls for foreclosure takes a look at sales statistics for Bob’s town and his neighborhood. Nothing is moving and foreclosure backlogs are growing. Average bids at auctions are coming in at less than 60% of the loan amount. Less than 2% of foreclosed houses are selling at auction. The estimate on what the property can realize in a foreclosure and sale is way too high for current conditions. If the house sells, and it’s a big if, it won’t be for anything near the price used in the NPV calculation. The investor decides to pull back on the foreclosure due to the regular hits he’s already taking in his portfolio and his aversion to putting another property into the portfolio. The pullback on the foreclosure doesn’t mean he’s going to allow for a modification, however. There’s a haircut waiting with the modification as well. This property is going to sit in limbo while things work themselves out.
There won’t be any communication regarding this stalemate between Bob, the servicer, or the lender. From Bob’s point of view the servicer’s people aren’t responsive and aren’t calling him back. The truth of the matter is that the servicer’s processors know as much about Bob’s situation as Bob does; not much. The sides settle in to the day to day of nothing happening which stretches to months.
The commentary from homeowners that have tried to modify their mortgages under the guidelines of Making Home Affordable runs along a thread very similar to that of our theoretical Bob. While much of the delay can be attributed to overload, staffing, and training issues at the lenders and servicers, the stalemate between servicers and their investors is bogging things down as well. The Safe Harbor Bill, passed by Congress in May, was aimed directly at this standoff. Its main objective was to remove the threat of lawsuits filed by investors when they felt that the servicers were acting on their own best interests in approving loan modifications.
While there may be a conflict of interest currently, neither side wants to go to war over this issue. Despite the increased autonomy given the servicers, it’s likely that they will still want to be on the same page with investors to preserve long standing relationships that have worked well over time. It therefore looks like limbo, status quo, and homeowners waiting for a knock on the door will rule the day and the near term.
Feldman Law Center – Federal Government Prodding Loan Companies
January 13th, 2010 by adminLoan modifications have grown in popularity over the years because they have been increasingly successful in keeping people in their homes. As a result, the federal government has become a big fan of loan modifications and is getting more involved. The Obama administration is pressing mortgage servicing companies to step up their efforts to modify troubled loans under its housing rescue program. The White House is frustrated with the pace at which homes are being foreclosed on, as well as the pace with which loan modifications are being processed.
The Obama administration has seen a significant “ramp up” of loan modification activity, but it often times does not seem like enough when so many people are hurting. Federal loan modifications have helped some people stay in their homes, but the federal government often cannot give enough attention to all of the people who need help right now. Think about the millions upon millions of homeowners who need assistance with their mortgages and how few government representatives there are helping them. What many people need is a California loan modification attorney working with them, one on one, to keep their homes.
Housing counselors say they are disappointed by the progress made so far under the current Administration’s program, saying they are not getting anywhere near the results they were hoping for. They are saying the services are not up to par, which often means that there are not enough people answering phones for those who are calling. Sometimes, housing counselors have to educate the staff about their own programs, which means the government is not properly educating the people who were hired to help the public. In fact, Maeve Elise Brown of the Housing and Economic Rights Advocates said “Homeowners on their own are not able to navigate the system.”
All of this translates into homeowners needing an advocate who can take the time to listen to their needs, help them with their problem and be their advocate when no one else is helping them. A qualified loan modification attorney can walk you through all of the challenges and headaches that people are dealing with, whether you are considering a foreclosure, short sale or bankruptcy. A loan modification attorney can act on your behalf and aggressively fight for you, your family and your home.
Loan modifications can help you avoid foreclosure and stay in your home by renegotiating your mortgage terms to get your monthly payments much lower. This can be done by lowering your interest rate, getting a fixed rate instead of an adjustable interest rate, getting a principal reduction or some other option. A qualified California loan modification attorney will be able to effectively negotiate with banks and lenders, getting you the best terms possible for your loan modification. These are not easy times we live in, and everyone around you might be facing the most difficult financial circumstances anyone has faced in the last fifty years. However, with a loan modification attorney, you can rest assured that you have someone working on your behalf to help you avoid the storm.
Visit us at http://www.feldmanlawcenter.com or call 800-588-0425
Legal Disclaimer
The information contained herein is provided for general information and advertising purposes only and is not intended to convey a legal option nor legal advice for any particular case or situation. Nothing in this article shall create an attorney-client relationship. Nothing sent to this law office via e-mail shall constitute an attorney-client relationship. Nothing contained in this article shall be construed to be a guarantee or prediction of result. Prior results are provided for general information purposes only and do not guaranty, warranty or predict a similar outcome with respect to any future matter. Results achieved depend on individual circumstances and not everyone will qualify or be successful in restructuring their mortgage loan.
Author: Greg Feldman
