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There are many option for home owners these days. President Obama has just rolled out the latest stimulus package, it is designed to help millions, and I mean millions struggling with their mortgages. We are still getting all of the details and will release allot of information very soon. However, this is aimed at lowering 1St and 2ND liens , and in addition to that it will allow many individuals to refinance at a great new low fixed rate. There will be incentives given to mortgage lenders as well as homeowners to get these loans modified and modified quickly. Not everyone will qualify but , a great amount of homeowners that did not qualify from former President Bush's program, will now qualify with President Obama's new plan.
Our team with all of our knowledge and experience will fight to lower your mortgage payments. We will be updating our site with much more details in a matter of about a week or so. We have the general outline of the new plan and a lot of information, but we still would like to get more details as they develop before throwing it out. This information is not out to the general public yet. This new plan will give us more ammunition to get you that new low fixed rate for many years to come, in fact for the life of your loan . Also, remember some homeowners will get money paid on their mortgage directly from the government for thousands off dollars within 5 yrs after their new lower rate. Follow up by visiting this site for more information, this site stays ahead of the learning curve.
Our government is still completing the details on the mortgage stimulus plan. They were expected to finalize the plan by April 1, 2009; which still has not happened yet. However, we are expecting that to happen really soon. That can be a good thing, because it just means that there is more thought being put into this program to make sure that all of the gaps are filled in, and everything runs well. Some mortgage companies are on hold with the program, while other companies are going forward with the program. The reason is, the loan modification is a process that takes some time to complete, and there are necessary steps that must be completed to before the modification plan is finished. For example, there has to be a Broker Price Opinion(BPO) done on all properties fixing to be modified. The property value has to be evaluated unless it was recently completed already. So since that will be a vital part of the process, some companies are forging ahead, and doing what must be done even if congress is still finalizing the Homeowner Affordability and Stability plan details. Please keep follwing up on their progress.
In the current mortgage crisis getting good valuable mortgage help is the key to staying ahead and staying in your home. Currently there are many homeowners all across the country that are having a hard time paying for there mortgages. We went through the whole mortgage meltdown when sub-prime lenders started to take advantage of borrowers with credit problems. This caused a backlash of homeowners to go into foreclosure, or to have serious problems keeping up with their mortgage payments. Regardless, you will get tons of free mortgage loan modification help! We will cover a lot of information below and all over this website.
Most of the mortgage problem started with re-packaging of bad loan that was laced into the AAA credit class loan and confused as all good loans back in the early 2000's. Many home owners got into a home for the first time ever. Back them President Bush was pushing home ownership for everyone, especially minorities. The Federal reserve chairman at the time Allan Greenspan also encouraged home ownership. They wanted more home owners and lenders to back them. Wallstreet was excited about the whole proposition and banks started lending. Home ownership skyrocketed, and so did home prices. Suddenly many American were finding themselves home owner. The refinance market started to boom and the housing bubble of 2002 was born.
Our company specializes in assisting home owners in trouble of loosing their property. We offer help with loan modifications for just about any mortgage loan, Fannie Mae and Freddie Mac Home Savers Advance loan help, and stream line loan modification help. These are the most common loan help programs out there right now, and we specialize in helping homeowners with these loans. What our company does is, we contact your mortgage company and negotiate to have your mortgage payments lowered. Sometimes saving individual homeowners over a thousand dollars on their monthly home loan payments. Just think how much that could add up over the 20 or 30 years of reduction in mortgage payments.
Many can't afford to make their house payment in these tough economic times, and are having to deal with the sub-prime meltdown. This became a large set of problems for individuals to keep up with their payments. So many are trying very hard to stay in their homes, but they just can't see to afford to do so.
Obama's Stimulus Mortgage Plan:
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Tip:
Figure out your mortgage payment without a mortgage calculator by calculating the numbers by on your own.
Formula:
Take the total loan amount and Divided it by 12 then multiply it by the interest rate= the monthly payment (P/I).
You can also add Taxes, Insurance, and add PMI if you have a 80/20 instead of a 100% loan, for the complete payment(PITI).
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With the mortgage problems that we have been experiencing it is no wonder why the new requirements are constantly changing. Based on the new norms, whenever anyone takes out a home loan they are many mortgage companies that are requiring a down payment and for the loan to be escrowed .
Doing a down payment of 3-5% and escrowing loans will most definitely reduce the number of qualified applicants . The pool of qualified borrowers will be lowered by the number of new loan applicants that are able to meet the minimum standards. On the other hand, the new low interest rates currently being offered will offset some of that, and give a boost to the depressed house buying market; But time will tell the result that we get. As many of you might already know, housing has almost always lead the economy into and out of nearly all of our recessions. The housing market usually recovers in time, and so will the home values. This is a never ending cycle that is a part of the economy, and it will continue to play a major role in the economy.
Homeowners In Desperate Need of Help
There are many homeowners that just can’t seem to get the right help to lower their mortgages especially the ones trying lower their mortgage payments on their own. Please understand that a decent amount of homeowners can be modified, however there are some that have not received their modification that is long overdue.
Those unfortunate souls that have tried with no luck should consider a few important things before “throwing in the towel and giving up” on any hopes of getting a loan modification. You might be one of those homeowners. First and Foremost, you should talk to your lender and continue plea with them and give them the reasons why you can’t not afford your high payments; Give reasons such as the current interest rates being offered that are extremely low at this time, explain how loosing this home might hurt you and your family, and why foreclosure should be the last option for you both. If they keep on giving you “the run around” and excuses then you might want to consider seeking professional help with experts who are fully experienced in this area than you might be. There are usually charges associated with getting a modification through professionals. You will want to sit down with your family and weight the risk of keeping the high payment you currently have, and consider taking a chance on getting some professional assistance, the savings could be tremendous over the years from getting a lower payment. If that is out of the question for you due to the fees associated with a loan modification, then continue reading. Whenever you call to you lender or servicer and can’t seem to get any real help, then escalate to upper management your needs for a loan modification until you are heard loud and clear. Please understand, there is a time frame associated with getting help to lower your mortgage, however, you can get the sense when your are being ignored and if you are “getting the run around.” Keep pressing the reasons why you need help with your mortgage payment, plus the benefits associated with that, and why a foreclosure should be the absolute last result for you both.
If you find yourself getting further and further behind, there are some things that you will need to know. Find out from your lender what your final date to avoid foreclosure by making a payment is. Educate your self on that date, and become familiar with it because it change often. That date is often called a demand date or the foreclosure avoidance date. That is that last day that you have to make at least one of your full mortgage payment in order to try to avoid foreclosure, it is usually around the point where you are about 3 months past due on your payments. However, some loans are allowed to go beyond the 3 month past due point, again find out from your lender or loan servicer. Once you are aware of that date you can use it to your benefit; Lets say your are around 3 months behind, as long as you can get in at least one full payment by that date, then your don’t have to worry about foreclosure even if they require payment in full, one payment will do. You might still have the mortgage company calling you for payments but at least you know that once you stay ahead of that date by paying, your can continue to coast on by. Another thing to know is, whenever you make a full payment before that foreclosure payment date your will get anther 30-45 days before you have to make another payment to avoid that date again in the future.
If you are unable to make a payment before that foreclosure payment date at any point, remember that you can dispute anything on your account based on Real Estate Settlement Procedures Act(RESPA), and buy valuable additional time to avoid a foreclosure, or if you are in foreclosure it will allow you to avoid a foreclosure sale just by disputing something with your lender. The only thing you have to do is to send a valid written dispute of anything on your account, and your lender has 60 days to investigate and send a valid response. That buys you valuable time to build up additional funds or continue to pursue a lower mortgage payment. For example, write into your lender or servicer right before your demand date or foreclosure date is fixing to expire and dispute something like the charges on your bill, or why you don’t think you are being treated fairly when it comes to you getting a loan modification to lower your house payments. That’s a valid written dispute, and that will cease any progression of your loan toward your loan going into foreclosure, or if you are already in foreclosure it will delay a foreclosure sale until you lender responds. They have up to 60 days to respond; but many mortgage companies try to respond with in about 30 days, so that they can pick up with your loan where they left off, and continue to progress the account. Make sure all of your disputes are sent certified with a return receipt request, that way you know when they received it and who signed for it in case you ever need the proof for court because you were evicted off the property for non-payment. Then you have proof that you sent a valid dispute which was ignored, and your loan progressed to a foreclosure sale, you would have ground for getting back into the property, and for recovering any expenses associated with the eviction. Lets say, you were disputing your mortgage just to buy time to figure out your next payment or to move out, then that could give your another 30-60 days worth of time which could mean a big difference for you and your family.
Even if your property goes into foreclosure it does not mean that you have lost it. 1st of all, your mortgage company does not want to have a foreclosure, it’s almost always a last option. Unless you have great amounts of equity in the property and your mortgage company would benefit by foreclosing when the time was right; Then yes, a foreclosure might not be so bad for your mortgage company to pursue because they might end up getting most or all of their money back from the foreclosure sale; But most homeowners are not in that position, many are upside down. Regardless, if you make it into foreclosure, they will try their best to work out a re-payment plan to try to bring you back out of foreclosure, and get you paying on a strict repayment plan if your finances will allow you to do so. If that can’t be accomplished, they will try to complete the modification you have been seeking, a short sale of the property, or a Deed-in-Lieu of foreclosure 1st before they do the foreclosure sale. An account will sit in foreclosure for 2 to 11 months depending on the state where the real estate is located before a foreclosure sale date is set , and you can try to work out one of the above options that I mentioned in the mean time. For example, In New York a homeowner has close to a year once their account goes into foreclosure before a sale is completed. So if you think about it : you could go 3 months past due on your payments, then you might go into foreclosure for about another 2 to 11 months before a foreclosure sale date is set, and an eviction notice date is given. That‘s a lot of time not paying your mortgage. It could take over a year to complete the whole foreclosure process, and you could be living for free all of that time, depending on which state where your property is in. That’s a long time to go without paying a mortgage.
In some cases if all else fails, and you really like the property and want to stay there, you might be able to work something out with the new owners once you’ve learnt of his/her identity after the property sale is completed. You might be able to stay on the property as a renter. If you explain to that person(s) the reason why you became delinquent on your payment and they genuinely believe you and understand, especially if they were going to use the property an investment property; They might be able to give you a new lower payment , and allow you to stay there for a while. You might even be able to buy back the property in few years once you’ve developed a good payment history with the new owners. The possibilities are endless.
Government Modification Takes Time
Homeowners keep wondering why the government modification is taking so long to complete and wondering why that could be. Some homeowners don’t believe the government will help the mortgage industry out much, if any. Others are sure the government stimulus is already helping out, and it’s just a matter of time before we will see the many results.
The government is planning to help up to 9 million homeowners to lower their house payments with the new mortgage stimulus program; But they are going to help the homeowners with the highest housing to income ratio. Homeowners will need to have a housing to income ratio of at least 31% , and meet some other minor requirements in order to see their mortgage payments drop. The problem currently is that the U.S Treasury Department has not finished writing all of the particulars yet that would make it possible to start modifying home loans. They are expected to finish up this elaborate mortgage assistance program very soon now. The plan is already behind schedule with it’s completion date already.
A lot of mortgage companies had cease to do loan modifications of their own pending the government program. Believing that the government mortgage stimulus plan would consume much of their man power and resources in modifying many of their loans. Since the stimulus is still a work in progress, some mortgage companies have resumed with their old loan modification programs, while keeping an eye out for the government program. This can be beneficial for homeowners because many of them can still apply for their mortgage company’s modification while awaiting the government modification. There are many similarities between the 2 loan modifications. As time passes by it seems as if more homeowners are getting more and more help, as the industry continues to bottom as we are still in a deep recession and are still contracting.
I believe by later this year to about the 1st quarter of 2010 we should see a bottom in the market, and a gradual turnaround in the economy. No one knows for sure when we will come out of this recession , but there are some signs that are starting to show as we progress forward out of this situation. Once we recover, hopefully we would have learnt a valuable lesson from this recession, and lenders will not start to lend irresponsible once again.
See Ways To Solve Our Mortgage Crisis
Everyone can easily see the problems that the housing market is facing. However, solving it is another issue. Over 1.5 million homes are sitting vacant across America. With such high number of vacant properties sitting around deteriorating, banks are loosing money on these properties, while house prices continue to fall. Until something is done, the situation might worsen before it improves.
We need to cut down on the new construction of homes until the demand catches up to the large supply that we currently have. Places across America such as Detroit and Miami that have been some of the hardest hit by the housing crisis, are still steadily building homes; and the demand just isn’t there.
Another thing we need to do is curtail the number of foreclosures entering the market. We should modify more loans, do more short sales, more deed-in-lieu of Foreclosures, among other mitigation efforts to limit the number of foreclosures. Keeping foreclosures to a minimum will help to keep the housing prices higher, and encourage more buyers back into the market place.
If the demand side can be increased as the supply is diminished for the moment, that would help in mitigating losses to a degree. Getting the foreclosed homes into the hands of investors and private buyers quickly can help to keep the losses down. Investors and buyers should be required to put down a decent down payment on these properties when purchasing, to ensure that they will have a deeper interest in the property, and will think twice about walking a walking away from the property if they should choose to do so. Investor’s can then turn these properties into rental and lease properties for cash flow, and they will see a return on their investment sold.
Lowering the mortgage interest rates to about 3.5 % rate would increase the number of investors to get back into the housing business. Interest rates are low, but they can become lower for the benefit of investor, private buyers, and the industry’s well being. For example, Treasury rates have about 2 % lower on average than mortgage rates for about a decade now, and the spread should not be that great. Mortgage rates have improved, however, they should be lower and closer to the Treasury rate. Think how that may stimulate the economy.
The Government is Making it Harder For Appriasers
Our government has made some more changes to make it harder for banks and appraisers to communicate. The reason behind the new plan is for government to exercise more power in keeping bankers and appraisers from taking advantage of the housing market by over inflating home price with inflated appraisals. In the past right before the housing market crashed in the fall of 2006, many banks and lenders were encouraging appraisers to inflate their house appraisals, that way the banks and the appraisers would end up making more money on each housing deal. In order to continue to correct those prior problems that caused the mess we are still recovering from, government felt that they had to put such measures in place. Lately this is the trend that many home buyers and seller have just started to experience in different states, and many more states will become apart of this trend including Texas. There is or will be a 5-20% appraisal reduction in the actual housing appraisal regardless of the current value.
Government is preventing banks and appraisers to from talking directly as they once did. The new organization in place called the Appraisal Management Company(AMC) which is basically another middle man in the mortgage industry. They were set up to mediate the communication between banks and appraisers to better protect us from buying and selling homes that are not worth the prices we were once paid for them. This has an effect on banks and appraisers alike. Appraisers are no longer as excited to appraise homes that can take hours to complete with less commissioned pay checks. Now many of the nations 60,000 appraisers will have to get a 2ND job to accommodate the life styles that have gotten accustomed to, and many of them are complaining. Banks are also not making as much on homes loans as they once did. The looser are the homeowners that bought their home a their primary residence, and now they are wanting to sell it for whatever reason(s), and find themselves giving up tens of thousands in some cases in hard earned equity to a new home buyer, and the new buyer is having to come up with a down payment also. We hope this trend is temporary, and homes will get their real market rate value back, which will be beneficial to all.
Mortgage Recap Information:
The housing crisis that has became a huge problem in the last few years it is affecting just about every part of the country. The problem started with the sub-prime market meltdown. Even though most of the predatory lending has ceased, there are many home owners that are feeling the sub-prime melt down and the effects of it. The market will normally correct itself in time. However our economy is in turmoil due to the whole sub-prime lending primarily from 2005 and 2006. Some of the states have been greatly affected, especially Florida, California, Arizona, and New York. Many home owners started out with low teaser rates on their adjustable mortgages with the first few years at an attractive rate, and when that time had passed the reality of the new higher mortgage began to set in. Now some home owners are seeing their mortgages almost double in a few short year. Burrowers took on these low rates to start out with a comfortable payment hoping to get into a higher paying job or just wanted to get some appreciation in their homes. When that did not happen then there was real trouble for many home owners trying to make their new larger house payments. The blame can not be only be placed on the predatory lenders that preyed on borrowers, but also on some of individuals taking out loans they know they could not afford once the rate adjusted.
Government has been trying to lend a helping hand with the 780 billion dollar bail out plan, but their efforts might not be as helpful the to average home owners as it is to the big financial institutions that the funds might be primarily allocated to. Most resident need help and they need it now! The best ways to try to save home owners is to talk to their actual bank, mortgage companies, or their loan servicers. For the average home owner that is in imminent danger, he/she should contact their lenders as soon as possible. Many lender are willing to work with home owners that are in serious jeopardy of defaulting on their loan. There are many programs that can be worked out to try to avoid foreclosure. The main thing that are being offered currently are Loan modification, short sale, deed in lieu of foreclosure, principal forgiveness(even though less common). Don’t underestimate a short sale or a Deed-in-lieu(DIL) of foreclosure if a loan modification is not attainable. These are sometimes the only option to a loan modification. A loan modification can be very beneficial if is done well to the point where it makes home ownership affordable to the homeowner once again. If a borrower is not allowed to modified their loan for whatever reason, whether it’s the net property value not being high enough for it to make sense to the lender to modify due to a depressed area, or if the homeowner does not have the financial capability to do a loan payment that is being proposed , or any other unfortunate results for modification not being successful. If a lender gives one a flat out no, and a borrower has exhausted all of his/her options, sometimes there is no other option but to consider doing a short sale or DIL of the property.
To some homeowners that may seem like a failure for them, but in fact it does not have to be that. This might give someone the opportunity to sell or give back the property and move out, and take some time to re-organize and become financially strong again. That is similar to when a company files bankruptcy to reorganize and rebound. Someone might consider renting a house or an apartment a lot less than they would having to pay for their home, therefore giving the borrower the opportunity to possibly build back up some savings, and/or pay off other debts that is hanging over their heads. Plus, doing a short sale or a DIL is not weighed nearly as heavily as a foreclosure is weighed. If one does the above mentioned, this can be considered as a period of reorganizing, recovery, and rebuilding if one can afford to do so at this point. Time will pass, credit can recover from late payments, and savings can accumulated once again. Renting can be viewed at a temporary refuge while recovering. I know some might disagree with the obvious, but sometimes we have to do what is necessary, and not what’s desirable. If someone is not willing to do any of the above and they were turned down for a loan modification for whatever reason; It’s just a matter of time before the property is auctioned off and they have no choice but to leave the property willingly, or be removed physically. Either way, that is what the result could end up becoming. Ladies and gentleman choose your battles wisely.
Why Pay High Priced Attorneys When You Can Do It On Your Own:
In most cases it is not necessary for the average homeowner to hire legal advise. Commonly whenever a homeowner hires high priced counsel they are paying for something that does not take a lot of energy or work to complete on their own. Many homeowners get nervous and worried about their mortgages being behind and they start to panic. Making a simple phone call to your mortgage company, and talking to them will get you on the right track towards straightening out your mortgage problems. I have heard about clients using attorney’s to get out of foreclosure when they don‘t have to. That’s a simple task in it self that does not necessarily require a foreclosure attorney that can get one out of foreclosure and back on track. A key thing that a person in foreclosure needs to do besides calling to their lender is to find out what date their property sale date is scheduled for, once they have that date, then use that date as their guide for making the payment if possible. A homeowner that is in foreclosure can call directly to their mortgage company’s foreclosure attorney to get their property sale date information too. If paying is not possible by the sale date, then just keep requesting for sale date extensions through your lender. There are some mortgage companies that will extend a sale date 5 time without the homeowner paying in come cases with the right reason. That is like getting another 5 months on top of the amount of time since the last payment was last made by the homeowner, which might add up to close to a year since the last payment with a few sale date extensions.
Now if a homeowner can’t make a payment in 9 or 10 months for example, that person might not be the ideal candidate to be a long term homeowner. So ladies and gentlemen there are many ways around not making your regular mortgage payment which will affect your credit. However, you are not making any payments. We don’t encourage this, but if you don’t have any other choice then you might have to avoid paying, and squat on the property for a while and then eventually move out or pay up. In some cases homeowners have avoided mortgage payments for well over a year, and have legally continued to live on the property. There are strict rules when it come to foreclosing and auctioning off any property in all state. If you know how the “game” is played, you can use this to your advantage to try to fix your personal issues, and buy a little time to do so. Lookout for more mortgage updates coming soon.
Statistics show that using an attorney or an experienced 3rd party will yield you a higher rate of approval for a loan modification than by doing it yourself; but the difference between you an an attorney is knowledge , experience, and presistence. Just reading up on loan modifications will give you a lot of good information that you might not have known before. If you use the information and are presistence, it can make a big difference for you getting approved for a loan modification, even if you are not the ideal candidate.
Fraud Modification Companies:
Why are there so many con artists coming out of the woodwork. They are promising guaranteed help to homeowners in financial trouble that can’t pay their mortgages. To make things worst, unsuspecting homeowners that are uninformed are actually shelling out thousands to try to reduce their house payment.
Due to the economics crisis that has unfolded in the past few years, lots of overnight loan modification companies has begun to spring up all over the place. A lot of them have just gotten their business license and suddenly they are promising the world to distressed homeowners. There have been stories all over the media showing cases of someone on the verge of loosing his/her property, and has managed to scrape together all the money that they can beg and borrow; Then they turn around and hand it over to some fly by night scam artist/company that takes them for a ride with false promises. This has got to stop, there are new laws coming out to try to deter these types of predatory behaviors which have caused more harm that anything else.
Homeowners should not be so gullible to think that a company that is not their actual mortgage company or servicer can actually promise them a guaranteed loan modification. No 3rd party company such as loan modification companies, attorneys, brokers, or any other real estate professional that is not the mortgage company or the lender can make such a promise. Or if they do make such a promise, that is a big red flag that is warning you , and letting you know that you are dealing with a predatory organization that preys on individuals in a precarious positions. The only thing that a 3rd party company or professional can guarantee you might be that they are very good at what they do, and they have a high success rate for their clients. That is pretty much it. Anything else is crossing the honesty line into the abyss.
Think about this for a while, if a company is guaranteeing you to lower your mortgage, how are they able to do so with an established lender that is holding your mortgage note. What makes them so special or so powerful that the lender is willing to take a loss just to keep a homeowner that is already not paying in most cases, on the property for an even greater financial loss. Sure it’s common knowledge that lenders don’t really want to foreclose due to financial losses in the neighborhood of $30,000-40,000 loss on the average foreclosed home once they go to the foreclosure sale, but at the same time there is a line that is drawn by any lender in regards to the mortgagee that is squatting on the property and has not paid. Mathematical calculations are done to determine if there is a greater risk of loss due to the foreclosure sale, or from the homeowner still remaining on the property and not making regular payments, plus a broker price opinion is done to determine the property’s value. Ladies and gentlemen that’s is the edge that a lot of 3rd party loan modification companies use to reel you in and base their decision on when they decide to let you know that they are guaranteeing to lower you mortgage. They think that most mortgage companies will modify due to the current decline in real estate value, but not all properties are like that. There are still many of properties with healthy amounts of equity that a lender will not think twice about liquidating if the homeowner is not paying, but is sitting on all the equity. Remember, a big part of the lenders decision is based on business and profits, which they need to keep their business alive.
From a professional vantage point, don’t go with a company that guarantees that you will achieve your loan modification goal. Don’t believe it if they promise you, guarantee you, or will approve you for a lower payment; Those are the key words to stay away from when it comes to choosing a reputable company to help you to lower your mortgage payments. Another thing is that a company can’t guarantee you by a certain date to complete the modification process or a certain dollar amount that they can lower you payments by, because they can’t even determine if you will even get a modification. Not because a company or professional has completed 99 successful loan modifications in a row mean that they will be successful in completing the 100th modification. So it would be unwise to guarantee a lower payment because one never knows how the lender will view that 100th loan.
I have seen and heard of too many desperate individuals and families being taken for a ride by scam artists, fly by night, or dishonest companies. It’s so sad that any company or professional would stoop so low as to make false and unsubstantiated promises just to make a buck and in turn ruin families, which ruins the fabric of our society. We have a professional and moral duty to help out in this financial crisis not cause more turmoil with false promises and lies.
There are some new developments coming out with the Presidents loan modification soon, but the Treasury Department is still wrapping up the final details. Regardless, a lot of mortgage companies and lenders are formulating their own mortgage help plans in lieu of the government plan. So please continue to be patient homeowners, or try other options that are now commonly available instead of the government mortgage help plan. In fact, the government has strict requirements on their modification like I have mentioned before. I have seen a lot of mortgage companies and servicers stepping up and taking matters into their own hands by mirroring the government's modification program, but they are also offering it with more flexible terms to help out stressed out homeowners. They are also allowing some things that the government program is not allowing. For example, I have seen mortgage companies allowing rental properties and 2ND home residents to be included in their program, where as the government is not allowing that on theirs.
The Future of Homeowners
The future of homeowners in the near future continues to be an ongoing struggle. Homeowners had been riding a wave of unrealistic appreciating home values and easy access to refinance money for years. Those days came to a crashing end in the fall of 2006, and reality began to set in. Homeowners were suddenly in real trouble making the monthly mortgage payments, which created a financial ripple in the economy ever since.
Things are changing for the mortgage industry, but unfortunately it seems to be changing at a snails pace. Things might have to get worse before they can get better. Houses have to reach an equilibrium price that way new buyers with new money can come back into the market once again, and government programs have to continuously be cranked out to help put some more rules in place to avoid future abuse again. A lot of the mortgage blame has been placed in the shoulders of mortgage professional who worked in a network that kept this vicious mortgage cycle going for so long. Some would say mortgage professionals kept everything going down the drains in the name of greed. They were making too much money too quickly. For example in the past, A homeowner could purchase a house today, and in about 6-12 months from now that same homeowner could turn around and refinance their home, and take the cash out in less than a year. This type of behavior was encouraged, because every time someone would cash out, chi ching, the mortgage professional is paid, and so is their company. Certainly this had to have an affect on the homeowner’s ability to re-build equity over time, and to be able to pay off their home as some point in the future. If this type of behavior continued for a years, repeatedly over and over again, at some point there may be a time when there might not be enough equity built back up in the property for someone to refinance, or when they property’s values might not appreciate at all. So when homeowners are depending on this sort of return continuously over and over again, and suddenly they are not in a position to refinance, that could be big problem; They are using their home as an ATM machine, and now they can’t, this could become a big problem. Now take that same problem and multiply that by millions of homeowners across the country, now this could become an economic disaster, which is what were are recovering from. History has taught us that housing has almost always lead us into and out of our previous recessions over the decades.
Eventually we will be back to where we were like in the early 2000’s of appreciating home values, a booming economy where things are great again. Remember there are good and bad times as some point in all market, and that is no different for real estate; just like we boomed in the early to mid 2000’s and busted, we will do it all over again in the near future. We will have had new laws in place to try to help us stay out of trouble, but we will eventually get back into trouble again. This is a never ending cycle once again; It drives our economy and gives us a sense of purpose. Regardless, there needs to be good laws in place to prevent abuse of the system. Investors and professionals aren’t the only ones to be blamed by the way, but while they are trying to make a quick buck by falsely helping to inflate property value; they contributed a great deal to the real estate bubble which caused so many hard working Americans to loose a lot of hard earned equity. If someone who has worked hard for 30 years to pay off their home tries to sell their home, and suddenly ½ their homes value just disappeared. Imagine how they might feel, and take that number and multiply that by a couple of million homeowners in their position, and you might see what I mean. True homeowners are the real victims here, not the weekend house flipper.
I honestly think the end of this last recession is near, in fact, many other experts think it’s over already. We normally have to look back in time at a certain point to see the true time period of a recession or economic slow down that occurred. We look at recessions in hindsight to get a true picture of the time span.
Your Home is Your Castle
Remember your home is your castle, you want to do whatever it takes to preserve it and stay in it if that is your ultimate goal. Being a professional in this field myself I see so many homeowners removed from their property due to them being past due on their loans, they are so far behind on their loans that they end up loosing the property to foreclosure auctions. There is a point where, unfortunately, some borrowers can’t be helped out of every situation. Sometimes the borrower can’t be helped because if they were to be helped, their mortgage company would have to suffer great losses to offer you assistance with a modification.
Many borrowers just don’t look hard enough for money sources in order to get out of being late with their payments. I think one of most overlooked area for seeking funds to get out of being late with a mortgage is a accessing one’s 401k. Your 401k is a great place to get out money when you are in trouble with your mortgager, especially if your property is at risk of going to sale soon. Your 401k will grant you the funds if you about to loose your property, usually all you need is a letter from your mortgage company or a 3rd party like an attorney representing your mortgage company saying you are behind with your mortgage, and your are at risk of loosing your property in the letter. Then you present it to your 401k and wait about 10 days for funds. It is especially hard for anyone coming out of bankruptcy that is trying to pay down a mortgage loan and become current with their loans.
Personally, I think that if a homeowner really wants to save their home that is in foreclosure, there are many options out there at their disposal that can be accessed and they can get some real help with their mortgage. A lot of time can past between one being past due with their payments to the property actually going to foreclosure auction and them loosing a home. Homeowners can check with HUD, charitable organizations, family, financial institutions, their 401k if they have one, just to name a few of the places. The possibilities are limited mostly to one’s imagination. Don’t just give up and become another victim of the housing crunch; Fight! and never stop fighting if you are serious about keeping your home because you will be amazed at the possibilities sometimes. Stand tall and don’t give up, keep trying, believe me you can get out of this.
Do you Really Believe Your Lender Does not Want to Modify Your Loan?
Your lender wants to modify your loan, but they must screen you for hardship 1st. You are checked for hardship, for changes in your financial standing, or for payment increases that would lead you to financial hardship. Your lender will screen you for hardship and they will verify through documentation. These documents will include but are not limited to : Hardship affidavit, 4506-T(which is a tax history release form), tax returns, pay stubs, bank statements, credit checks, profit and loss statements(if self employed), social security or disability income if you such an income, utility bills for proof of residency, among other verification. Anytime the government lends a helping hand, everything must be verified before proceeding. For example with the Home Affordable Modification Program:
Your loan must have the unpaid principal balance of equal to or less than :
1 unit: $729.750
2 Units: $934,200
3 Units: $1,129,250
4 Units: $1,403,400
This must be your 1st Lien
Your loan had to have originated on or before January 1, 2009
Your loan must not have had a loan modification anytime in the past with your current lender
Your must currently have a monthly house to income ratio that is greater than 31% of the verified gross monthly income
This must be an owner occupied property, single family 1-4 unit property: including cooperative, manufactured home attached to a foundation and is treated as real property per that state’s law, and condo
The property must be owner occupied
The property can not be condemned or vacant
The program states that the borrower shall set up an escrow account for insurance and taxes prior to the loan modification documents
Foreclosure action will suspend during any trial modification period
Lender are willing to work with homeowner in need that can verify their income and prove that they are eligible for this program. Lenders don’t have to participate, it’s not the law of the land. However, lenders see that these programs are necessary in order to help to correct some of our housing problems. Even though they are lenders that are not participating in this program, there many more that are .
Lenders and servicers that part take in the modification process set by the government will be compensated with $1000 for each loan modified, plus a bonus pay for performing loans of anther $1000 a year additional. Homeowners who make their payments on time are eligible for up to $1000 of principal balance reduction a year for the 1st 5 years. So think about this for a minute, in addition to a new lowered payment and you account status brought current, a borrower who pays on time can get another $1000 wiped off the principal balance per year for up to 5 yrs for staying current. That’s not a bad deal at all, everyone benefits. Plus, the program will give lenders/investors $1500 and servicers $500 for modifying made to homeowners who are still current on their mortgage payments.
Lender and servicers are looking for this kind of cash injection into their businesses to fuel new business growth. Now do the numbers, think of the average lender with several million outstanding home loans, and the servicer with a few hundred thousand loans to service, now work the figures out. That is a tremendous amount of cash getting into their hands. They can now leverage that cash and acquire new business, better technology, and more manpower to accomplish their business objectives with ease. Don’t think your lender does not want to help you, because they do. It is beneficial for both parties, assuming your lender or servicer is participating and you fit their requirements; or should I say the government’s requirements.
Sources of Getting Foreclosure Information
Once a person’s house goes into the foreclosure process due to non payment on their mortgage, it becomes public record. The property will eventually be listed in the newspaper , internet, on signs, court house, among other places. So if you are shy about having your personal business out in the public, then the possibility of your property going into foreclosure should be avoided at all costs. Do everything you can to get the money and get some room between you and a foreclosure.
You will get almost everyone in the world looking to make a quick buck off you. They will be writing you and promising to get you help with your foreclosure matter. They will make it seem as if they can get you help no matter what your personal finances or situation is, but all at a cost with up front payment, and no guarantees. Don’t be fooled into believing that any one company can deliver you and get you out of foreclosure, because that is simply not always the case. Like I have said before, your mortgage company is the one and only entity making the decision whether to modify your loan, or decline it for a loan modification. No matter who you are choosing to pay, or if you do it your self, which is what I would suggest in most cases, you can only present your loan modification request to your mortgager, and then wait for them to make a decision based on your situation. Now do not get me wrong, you can and should fight if you were denied for a loan modification without a good reason, but also know when to call it quits. I had personally fought for and gotten loan modifications approved but with good reasons. If your get denied because your property has an extremely negative net present value(NPV), then there is nothing you can do currently to fix the situation. You might just be in a location that is extremely negative in the house current value relative to your loan amount, and lender is not willing to take a loss to keep you in the property, and you can’t blame then either. Some might argue and say, well what is the government mortgage modification stimulus good for then, but you can’t really look at it that way. The reason is, the government modification is designed to help homeowners; but it would be foolish for anyone to think that the modification will, or can help everyone. The government program has a lot of terms that might prevent a decent percentage of homeowners from getting approved for the program, everyone knows that 100% of homeowners can not be saved no matter what new programs come out. Unless everyone is willing to take some of the financial loss and move on. Now back to disputing your mortgage company’s decision about a modification, it would be ideal if there was something that was obviously a mistake on their part, or your circumstances changed. Changes such as:
Your lender had the wrong information was taken down for your financials
Your lender had out dated financial or personal information on you
Your financial situation changed drastically for the good or the bad
Your had important missing documents that you had already sent in to your mortgage company
Some of your account information can be received through the foreclosure attorney’s that are handling the property’s foreclosure procedures. However, many attorney’s are being paid to do a job by your mortgage company, and that’s who is paying them. Their job is to complete all of the legal steps necessary to get you out of the home if you stay delinquent beyond a certain point without intervention that bring you current with your mortgage. Often they do not give a homeowner the warmest reception once contacted about the loan, and are looking for help. Often times the attorney’s office will refer your back to speak with your mortgage company in most cases except if you are looking for written information in regards to your mortgage balance, sale date information, pay off information on the loan to get out of foreclosure, letters for your 401k to access funds, etc.
This brings up an important source for accessing money, and that is your 401k. I would not suggest going into anyone’s amassed 401k funds unless you can afford to do so at the moment and it makes good sense. This depends on some important factors such as:
Do you have equity in the property
Do you plan on staying in the property for at least 5 yrs
Do you have an affordable and reasonable mortgage interest rate currently
Are you getting out of foreclosure to just buy more time to maybe sell the property, or do you have more meaningful reasons
If you are given help by getting into your 401k money now, will you be back in the same position again in the near future
Those are just some serious question to consider before you blow all the money that might taken you years to save up, that you will have to eventually pay back once your take the funds out. Think about it, if you got out a decent amount of your 401k fund that has to be paid back in the near future, and you get your home out of foreclosure and you just can not maintain your payments and end back in foreclosure again; but this time you are back in foreclosure, and you still have that 401k garnishment looming over you. Try to make your decisions wisely.
Sometimes seeking professional advise can be a good thing. You don't necessarily have to pay for professional advise to get it. Contact your HUD agency, the American Red Cross, a pro bono attorney, talk to a faith based organization, among other places. You will be surprised sometimes on how much free information that may exist out there that can beneficial to you and your family. Just keep checking around and do not loose hope.
3rd Parties taking advantage of Homeowners
There has been an influx of 3rd parties taking advantage of hard working American just to make a quick buck. These cases are becoming more and more common everyday. Many homeowners become so desperate that they are willing to fork over the last amount of money they have to try and seek help, when there is no certainty of them being able to fix their situation by paying 3rd parties. I have personally seen so many cases where a homeowner hands over their money in hopes of getting a loan modification, and end up utterly disappointed and frustrated. There are attorneys among other professional out there promising homeowner that have fallen on hard times all kinds of ridiculous things. Personally I do not like to see it. The homeowner then believes it, and have this false sense of security. There was a recent case in Sacramento, California who a widow handed over $5,000 to an attorney that guaranteed her a lower house payment and that her house would be removed from foreclosure, and unfortunately that did not get done by the attorney; but the homeowner was finally able to get some real help with saving her home. I can not emphasize this any more, anytime someone guarantees you a lower house payment or a successful loan modification; turn the other way and run away. That person is not being totally honest with you. He or she my improve your chances of getting help based on your personal qualifications and their experience, but they should not and can not give you a guaranteed. With any company or person that tries to assist you, you are taking a chance with them, they do not own the loan , therefore they can not guarantee your results. Take this from someone who has work in the mortgage industry for many years, and has seen all kinds of things from different vantage points and deals with this on a regular basis. Do your homework. Hud is a great place to start at, 1-800-569-4287 or www.hud.gov with great advise, in addition to my site and some others. Ladies and gentlemen, I do not want to see you waste your money. If you are going to pay for help, just know that you are taking a chance like everyone else who pays for professional help with their mortgage. Make sure you are spending money you can afford to loose, that's all. In fact, a lot of times I have advised homeowner to not pay and seek help through self education, and use that money that they were going to pay to try to catch up their mortgage, or set it aside.
Make sure You Are Filling Out Your Loan Modification Documents Correctly
When completing the loan modification process completing the required documents is of the utmost importance. Homeowners are having a hard time completing their required documents which in turn is causing delays in the loan modification process. Your lender will give you a list of documents that are needed to do your loan modification. Some of the documents will be in your possession such as your tax returns or utility bill, while others will need to be printed off your computer, or any computer, or mailed out to you. These document are vital, or else you wont be getting any modification without the required documents. Getting the documents is the easy part, completing them the right way seems to be more challenging for a hefty fraction of homeowners looking for a loan modification. There is nothing hard or tricky about the questions, but some homeowners just have a hard time completing their documents.
Required documents are going to be documents such as: your personal tax returns, utility bills(water, light, heating, etc.), pay check stubs, bank statements,1045-T(it authorizes the IRS to release your tax information to a 3rd party such as your mortgager), hardship affidavit(Also Known as: form 1021), award letters(that state income such as unemployment, Social Security Income), Self employment income(such as: rental income, 1099 projects, or other forms of self employment income which will require a profit and loss statement of your stated income and expenses); these are the main if not all the required documents needed for your loan modification process to be completed. These documents need to be filled out correctly or else this could delay or stop a homeowner from getting a loan modification all together.
The document that is causing the most grief for homeowners would most definitely be the 4506-T. The questions on the 4506-T are commonly overlooked, incompletely filled out, or filled out incorrectly. Please understand these are simple questions that any homeowner would have the answer for, but they just do not seem to get completed correctly. I will just cover the 2 most missed questions. Question #5, which asks for the name, address, and phone of your mortgage company, lender, or servicer. It is that simple but is often blank or partially completed. The IRS needs you to fill out the information correctly so they can send your tax information to your mortgage company. The other commonly missed question is #9, it asks for the last 4 years of tax return information that was filed and that you want to have sent to your mortgage company; on this question the answer might be : 12/31/2008, 12/31/2007, 12/31/2006, 12/31/2005 in most cases. That is it ladies and gentlemen, it is that simple. The other questions appear to get answered fairly well on the 1045-T form.
Just make sure that you are answering the questions that pertain to you, if they don’t pertain to you, you do not have to answer them or just put N/A. Always keep a copy of all the document that you have sent in to your lender for your personal record. You will be surprised at how often your lenders may ask for the same document that your have already sent in at least once before. Keep a master copy for you, and make copies from your copies if your lender lost some or all of your documents. If your loan modification takes too long, like over 3 months, you might have to resubmit new documents for everything once again. If that happens, you would want to copy your old document on a new form such as the 4506-T, and fill in the new date which will show newer documents for your lender to present to the IRS. The documents can not been more than a few months for some of them, and we all know that loan modifications can sometimes take over 3 months to get that lower mortgage payment. Just cross you T’s and dot your I’s and you will be o.k.
Modified Mortgage Loans are Being Repackaged
Mortgage loan companies everywhere are now starting to complete as many loan modifications as possible and using it to their benefits. Everyone is coming out ahead on a whole when this practice is done the right way. Mortgage companies and lenders are able to create a value for all parties involved. Mortgage companies create value for themselves, their borrowers, the investors, the community, and the housing market.
When mortgage companies are able to complete loan modifications in large numbers, they are helping homeowners avoid foreclosure, and are also benefiting their shareholders at the same time. Mortgage companies are now able to repackage their bad loans, and resell them to investors on wall street as new performing loans. Investors are looking to invest their money in safe investments. So it is rather important for lenders to be able to modify loans. They are not looking to hold on to these mortgage loans forever; they want their borrowers to establish a decent payment history of with them after any loan modification, and then they resell the loans to investors. Once the investors acquire these loan, they are more likely to have their investment perform well because the newly modified loans are more affordable for borrowers, therefore they are more likely to keep paying; not to mention they will have all of their past due payments brought back into the loan. Then again some may say investors are taking a big chance with these types of loans. Most of the borrowers if not all, were past due with their mortgage payments at one point or another. Some may say it depends on the individual’s circumstances that lead them to becoming delinquent with their payments, and not all of these borrowers will become past due again. Surely there are irresponsible borrower that won‘t pay or pay on time no matter what, but most homeowners intend to make their payments, and be on time with their mortgage payments as much as possible. They may have fallen behind due to circumstances, with the economy being at the top of the list. Lenders will try to do their best to get their borrowers modified just because of the benefits that are involved, that does not even include the mortgage stimulus benefits. The stimulus has another set of laundry list of benefits. If your mortgage company does not modify your mortgage loan, it is usually not because they do not want to. They are a lot of things that are taken into consideration, remember your mortgage company is a business. There are many different directions that they can move in, and they often choose the most beneficial from a business stand point, if you know what I mean.
Net Present Value Test(NPV) Denial
A common test that is being performed on new mortgage loan modification applicants is called a Net Present Value Test(NPV). This test performs a series of tests that evaluates the value of an investment now, and compares it to the projected value many years down the road. Unfortunately, there are some homeowners getting turned down due to failing this test, or coming out with negative NPV results. When a homeowner fails this test it is often pretty challenging for the lender to accept them for a loan modification. They will try just about anything to get a homeowner modified, but at this point it can be an uphill battle to get any homeowner with those results a mortgage loan modification. Lenders really do not want to take part in a mortgage loan modification if it will be a negative return on their investment; would you want to invest in something that will have a negative return on your hard earned money; most definitely not! Right? And yet some lenders will still keep trying to get you a modification because of the mortgage stimulus benefits. The government plays a role in their final determination, they will be subsidized to a certain point, and that can finish off their decision for an investor whether to modify a loan or not.
There are many Reasons for Modification Denial
There are some easy denials reasons to recover from a loan modification once denied, unlike the one previously discussed above. The main one that comes to mind is when a homeowner gets denied due to “lack of borrowers response.” When a borrower gets that reason for a mortgage loan modification denial it is rather simple to get back into the modification review process again unlike some other denial reasons. The main disadvantage when a homeowner gets a denial for “lack of borrowers response” is the time consumption of having to be re-reviewed again for a loan modification again. Often the homeowner has to start over the review process from scratch again which can take months to be decided upon; But it is fairly easy to get back into the review process, and have your sale date extended if you have an upcoming or pending sale date for foreclosure. Regardless, it is best to do what you need to do that way you do not waste time re-doing what you have done before over again.
Cash For Keys:
Some homeowners are taking advantage of the cash for keys program now available to homeowners by their lender. You hand over the keys and get anywhere from around $1200 to over $2000 just to hand back the keys and clear out of the property based on the agreed timeframe. That means either leaving the property so that they can auction it off , or doing a short sale that way you can be out of the property, and they can get back some of their investment. If your are looking to get some money back, and leave the property then you should check with your lender to see if and what it is they are willing to offer you to leave the property; even if your still owe them many months of past due payments, it does not matter . Your lender is looking to get you out of the property the quickest way possible, and that is why you are getting money even though you might still owe them several months of past due payments. It is starting to spread quickly among lenders. It is a smart business move for lenders to cut their losses with some homeowners and recuperate their investments by selling the property right away.
A Trial Modification Does Not Guarantee a Permanent Modification
Not because you received a loan modification offer means you will get the permanent loan modification offer. There are many homeowners that are getting loan mortgage loan modification offers, but if you do not comply with all that is being required by your mortgage company with in a set amount of time you may find yourself quickly denied. A trial modification will consist of you doing a trial payment plan, usually at a lower rater than your loan current payment amount for a few months first. When you are presented with the offer you are required to get in additional loan documents, unless your are one of the few that already sent in all of your documents fully completed already; the key word here is fully completed documents. If you are just winging your application and sent them back in to your lender you may find out later on that you still have not complied with the required documents in time, and find yourself out of a easy loan modification that you could have gotten. At which point, you have to start the whole process all over again if you are even allowed to at that point. The main thing you want to do is check up with your lender regularly, check to see if they have everything they need, “leave not stone unturned.” Check, check, and check some more. All it takes is 1 or 2 phone calls a week, until you know you have made it complete through your trial period if you were offered a trial loan modification by your mortgage company. Once you are completely through the trial period, you are then on the real loan modification program, and are now safely on your way to making a permanent lower mortgage payments. Follow up with your lender always, you will be amazed at the difference when you do.
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Homeowners with bad credit , triple BBB was being repackaged and sold as a AAA credit class. Banks would refinance them due to them getting approved for the home loans, and they would stay in the home for a year or two , and them refinance to pay off bills. Housing prices were raising at a staggering rate of 6-8% which sent home prices very high, very quickly, and them homeowners just cashed out. Their homes were being used as ATM machines. Of course this could not last forever. Eventually income had to catch up with home prices. Banks were finding out that the AAA loans that they thought they has were just repackaged bad loans. They stop refinancing. Then all of a sudden homeowners could not pay their mortgages and keep up with their lavish lifestyles because banks were not refinancing anymore to the masses. Therefore, the banks started going under , and big name financial institution like Bear Stern and Washington Mutual. The housing market as we know started to collapse starting in the 1St quarter of 2006. There ladies and gentlemen was just a summary of our recent housing market crisis. Will we ever recover, of course we will. However, when is the question, and the market is correcting as we speak, and it might take some time. So the reality has set in for us.
New Escrow And Down Payment Requirement Being Placed on Loans:
Escrow is another big problem for many borrowers. With escrow being placed on new loans that will increase mortgage payments substantially, and will deter some new buyers. The buyers that might not have a problem making that payments might be 1st time home buyers that will get back $8,000 back on their 1st time home purchase. For example, lets take a $200,000 home loan with a 4.75% interest rate on a 30yr fixed rate mortgage loan with principal, interest, and private mortgage insurance would be around $861/month for 360 months. Now take that same $861 and add property taxes based on 2.5% property tax rate. That would bring the new payment to around $1278/month escrowed, plus property insurance would need to be added. Remember, property insurance is always cheaper when you purchase your own insurance and not allow your lender to put force place insurance on your loan payment. With that being said, many new home buyers could be barred from getting a new home loan if they can’t make their payments with the escrow included. Even though interest rates have dropped significantly, it’s still challenging for many to get refinanced at a good rate.
