Loan Deals: News

In recent years millions of homeowners have faced the prospect of foreclosure.    With foreclosure not only does the homeowner lose their home but the lender loses as well.  One alternative to foreclosure is a loan modification.  With a loan modification, the terms of the loan are changed to make the monthly payments more affordable for the struggling borrower.  Here are five loan modification tips to help you through the process.

Tip #1 Call your lender and ask to speak to the loss mitigation department

If you find yourself falling behind on your mortgage payments you need to act quickly.  Call your lender and ask for the loss mitigation department.  They are the ones who handle loan modifications.  Ask for a loan modification application and get the process started.

Tip #2 Hiring someone to help you with your loan modification request is not necessary

It is not necessary to pay a loan modification company to help you.  You can deal directly with your lender and request a loan modification yourself if you are willing to do the upfront research to understand the process.  You may want to have an attorney look over the loan modification offer before you agree to it.

Tip #3 If you do decide to hire a loan modification company check their credentials.

If you do decide you would like help with your loan modification request be sure to thoroughly research the loan modification company.  Check to make sure that they have the proper license, contact the Better Business Bureau to see if there have been any complaints filed against them, ask for references, and find out what their experience is in handling loan modifications.

Tip #4 Have your house professionally appraised

All around the country home values have dropped.  You should have your house professionally appraised and use that as a point of negotiation with your lender when seeking your loan modification, particularly if the value of your home as dropped.

Tip #5.Start with a low offer

Your initial proposal for a loan modification should be for a low rate of interest or low payment plan.  You should anticipate that your lender will come back with a counter offer so you should start low.  Before you can do this you will need to figure out what you can truly afford to pay each month and what the lender’s criteria are for a loan modification.

Loan Modification Loan Modification, tips

It is difficult to decipher reputable and reliable loan modification companies from those that are just concerned with the dollar value. There are a few signs to look for which may indicate that a company is a scam. First, companies that requires all service fees to be paid up front, and then promise to refund the money if they are unsuccessful. Legitimate companies will likely ask for payments, one to begin the process, one after preliminary approval from the bank and a final one once the loan modification has been successfully completed.

Now, a successful loan modification does not necessarily mean that the borrower will have all their requests fulfilled; it simply means that the terms of the loan will be re-written hopefully to benefit the borrower. Second, not all borrower’s will be eligible for a loan modification, therefore, a company that offers its services without taking an in-depth look into the borrowers financial situation may be doing so only to benefit their own pocket book. A legitimate company will ask the borrower to complete a detailed application out lining their income, monthly expenses, mortgage information, and information about the economic hardship they have experienced. Based on this information the modification company will decide if the borrower is a good candidate for a loan modification. Third, if you have already tried to get a loan modification independently with a lender and have been denied chances are that a company will not be any more successful. However, loan modification companies claim that they will be more successful than borrowers on their own. In some cases this is true because legitimate loan modification companies have skilled workers who specialize in loans, but if a borrower is not eligible for a loan modification that is the bottom line.

Like I said, not all borrowers will be eligible for a loan modification, so it is very important that the loan modification company you choose takes a good like at your financial situation before making any promises or collecting any money. Fourth, if you have had a loan modification done in the last year and a loan modification company promises to get you a better modification, again, chances are they will not be successful. Borrowers who have already accepted a loan modification will likely have a fixed interest rate for a fixed period of time which makes it next to impossible to have a loan modified. Finally, each company should be licensed to and qualified to conduct loan modifications.

Any company that suggests that a loan modification is guaranteed should not be trusted. Since this is such a new industry there is no state or federal regulations dictating the practices of loan modification companies, therefore, there can be no guarantees. Be sure to check out several loan modification companies before you decide on any one. Get advice from a number of different sources so that you are fully informed. However, when it comes down to making the final decision, follow your instincts because they are usually right.

Loan Modification

4 Types Of Loan Modification

A loan modification is an alternative to foreclosure for thousands of struggling homeowners.  There are several types of loan modification programs, so if you are considering applying for a loan modification it is important that you understand the different types of loan modifications to help you in your negotiation process.

Loan Modification #1 Straight Capitalization Loan Modification

With this type of loan modification, any back interest is added back with the loan principal.  The new loan balance is amortized under the same conditions and loan terms of the current mortgage.  With this type of loan modification the payments are actually higher than the original loan, so this type of loan modification is used to bring any delinquent interest current.  In order to qualify for a straight capitalization loan modification the borrower would have to prove that they would be able meet the higher monthly payments.

Loan Modification #2 Loan Modification with Term Extension

This type of loan modification extends the loan term (how long you have to pay the loan off). This will result in lower monthly payments.  With this type of loan modification, the term of the loan can only be extended to whatever the length of the original term was.  So if the original loan was for 30 years, the term extension could extend for up to 30 years.

Loan Modification #3 Step Rate Loan Modification

With a step rate loan modification, the interest rate is adjusted instead of the term length to make the monthly payments more affordable.  A step rate drops the interest rate by up to 3% for the first year and then rises back up until it returns to the original interest rate.  A step rate loan modification gives a borrower in financial hardship some short-term relief by reducing the monthly payments for a few years.

Loan Modification #4 Reduced Rate Loan Modification

With a reduced rate loan modification the interest rate is lowered for the life of the loan rather than just temporarily like the step rate loan modification.

All of these types of loan modifications are designed to bring back payments owed on the loan current and to reduce monthly mortgage payments to help make a loan more affordable for a borrower facing financial hardship.  Extending the term of the loan or lowering the interest rate are the two main methods used to achieve this.  For some homeowners a lower monthly payment can mean the difference between losing their home and staying in their home and making more affordable mortgage payments.

Loan Modification

President Obama is expected to unveil a $50 billion foreclosure prevention program tomorrow and new standards for modifying home loans. Frank Komornik just hopes it comes in time.

He is caught in what one non-profit called an “epidemic” of bad mortgage modification offers.
With two jobs and $6,000 in credit card debt, Komornik admits he probably should not have bought the house in East Meadow, Long Island. But the price was good and the broker offered a $10,000 signing bonus.
The bonus never arrived. Then he lost his night job. The mortgage was scheduled to reach $6,000, so when a mortgage broker offered to modify his loan for a $900 upfront fee, Komornik jumped at the chance.
The deal fell through. The broker said sorry and told him to try ACORN, a nonprofit housing group. The $400 refund check he was sent bounced, and now he can’t reach the broker, he said.
“I’m trying to work this out before it explodes in my face,” he said.
Similar horror stories have flooded South Brooklyn Legal Services and other nonprofits that offer free help to homeowners, said SBLS attorney Rebekah Cook-Mack.
“It’s an epidemic,” she said.

Mortgage

In an effort to aid struggling homeowners, Chase bank on Friday said it plans to open five counseling centers in Florida where advisors will meet face-to-face with borrowers to help them avoid foreclosure.

The Homeownership Centers will open later this month at yet-to-be determined locations in Miami, Aventura, Fort Myers, Orlando and Tampa, the bank said.

Once open, trained advisors will meet with borrowers who have mortgages serviced by Chase, Washington Mutual or EMC, which are all now part of JP Morgan Chase.

On Thursday, the company announced the opening of four such centers in California, along with plans to open 24 additional centers around the country by the end of March.

In late 2008, Chase announced efforts to modify the terms on more than $110 billion worth of residential mortgages. It expects to help more than 650,000 families.

On Friday, JP Morgan Chase and Citigroup said they would hold off on initiating new foreclosures until the Obama administration can design a wide-scale loan modification plan to keep millions of borrowers in their homes.

Mortgage

Financial Management Advisors, a loan-modification company, charges up-front fees of up to $2,500 to troubled homeowners looking for help escaping foreclosure. The problem is that state law bars companies from charging the fees, and the company isn’t providing the services it promises, a complaint states.

Company attorney Luis Gonzalez says the company helps people and has never committed fraud.

“They’re barking up the wrong tree when it comes to FMA,” Gonzalez said.

The company — which also claims to be connected with major mortgage lenders, including Fannie Mae, Countrywide Financial and Lending Tree — has no documentation to support its claim, according to the state’s complaint.

Read the full article here

Mortgage

wwltv.com has an article about loan modification scams out there. Guys, it’s not that hard really. It’s your home, take control. Spend some time doing research. And doing your own loan modification is a lot easier then you think. But if you must hire somebody, be careful, last I read some 92% of the loan modification companies out there were operating illegally.

King has lived on her property for most of her life, but because of all this, she got a notice of seizure a few weeks ago. Her property goes to the sheriff’s sale on March 18.

 “You know, there’s a huge problem right now, with people getting scammed on loan modifications, said Kevin McGill, who teaches at loan modification seminars.

McGill said that, if it’s done right, a loan modification can help. But he warns that residents should be cautious.

“I would say that the majority of companies doing loan modifications are not doing them the right way, including the non-profits, and it’s very unfortunate that it’s taken a bad name, but you have to realize that this industry is only a couple of years old,” McGill said.

And the company that promised to modify King’s loan is now gone.

“I have five kids that I’m taking care of,” King said. “And, you know, it would be pretty hard to get out and try to start over. Where you going to go?”

 

Click here to read the full article

Loan Modification

How can I save my home? First obtain a reliable loan modification manual, like Your Basic Guide to Do it Yourself Loan Modification Kit, or retain the services of a loan modification company, the later being a quite costly. Second, begin the loan modification process; once it has begun this protects the home from going into foreclosure. Third, gather the necessary documents to build your case, such as proof of income, personal bank statements and proof of hardship. One must be patient going through this process.

Lenders will first require an update of the borrower’s financial situation. Based on this update the borrower will either be approved for a conditional loan modification or denied a loan modification all together. This process can take a toll on the borrower; just remember that while this process is in action your home is safe.

Furthermore, for those who are not approved for a loan modification there are still options. A short sale saves the borrowers credit and allows them to break even. For those who want to remain in their home for as long as possible the good news is that foreclosures are taking between nine months to a year because of the high number of them. If a borrower has received a loan modification in the last year, chances are they will not be offered another one.

The plus is that many borrowers are receiving preliminary approval for a loan modification, but they may have to wait between 30 and 45 days before they receive a loan modification proposal from their lender. Once the lender presents their proposal the borrower must decide if they want to accept. Remember that the bank still has their best interest at heart. The point of the loan modification is to help all parties involved; therefore, this may require some negotiation on both sides. This is where patients come into play, especially, for those who are negotiating their own loan modification. People are very passionate about their homes and will do what it takes to hold on to them. Stay calm, and remember the bank does not want you to lose your home anymore then you do.

Loan Modification