Distressed folks today are trying to learn about the loan modification process and are discovering themselves to be discouraged and lost. If you are...
Distressed folks today are trying to learn about the loan modification process and are discovering themselves to be discouraged and lost. If you are curious if a loan mod could be the answer your household is seeking to help them avoid foreclosure or be able to stay in their house; then please continue on reading this short article.
Understanding about this method can help alleviate the worry and strain of handling the dangers of foreclosure and can help you to solve your financial issues instantly. To be able to understand the basics, I have enclosed the Top Five Q&As concerning the loan modification process:
1. Exactly how should i find out if I meet the criteria for the loan modification method? The very first prerequisite your loan provider will be searching for is proof that you can easily pay the new monthly loan payment today and in the future. You’ll also have to provide evidence that you or your family have encountered some kind of a financial difficulty.
2. Just what modifications are going to be made to my original loan? Your past due loan could be brought current, and your rate of interest might be reduced. An extended term could possibly be available and sometimes even a reduction in your principle balance can be set up.
3. Will I still need to pay my overdue fees & charges? The majority of loan providers are now providing the option to waive your overdue fees and also your penalties should they feel you are eligible for the loan mod. Get ready to inquire your loan company for a detailed accounting and outline of your fees to make sure all your fees are warranted.
4. Can some of my missed payments be waived? Although your lender will not forgive the monies due she or he can generally permit your past due payments to be added into the new modified loan balance and distribute the money owed over the term of your modified loan.
5. Once my modification is approved how long will the new payment be in place? Under the revised loan you will be placed on a 3 month trial for the new payment. You need to pay this new payment on time for the first 3 months, then that new payment will probably be fixed for the next 5 years.
Have you been having problems meeting your mortgage and perhaps found that no one wants to purchase your house for more than you owe or even simply what you owe on it? If this is the situation, your home’s mortgage is more than what your house is valued at, so you are what is classified an “upside down mortgage holder.”
Plenty of people are usually stunned when they realize they are upside down, and until only recently, they most likely never heard about something known as a short sale, which is really simply selling your home for whatever you could get and then producing an agreement with the lender about the remaining balance due.
A lot of people usually are not happy with the short sale strategy, but do upside down mortgage holders have an alternative other than short sales. The response now is yes. There’s a new method available now called the Principal Balance Reduction Program.
A Principal Balance Reduction Program is in essence a system wherein home notes are sold to a hedge fund at a great low cost, the hedge fund decreases the total of principal owed to 95 percent of the market value and alters a number of terms and the rate of interest for the home owner.
Is this brand new option for you for anyone who is an upside down mortgage holder who’s been contemplating a short sale? Quite possibly. The huge benefits to you would be considerable savings, the potential to retain your house by effectively short selling the house to your self, and keeping your tax incentives and not ruining your credit history.
If you happen to discover youself to be dealing with the housing problems head-on, it is advisable to learn about the principal balance reduction program. Can upside down mortgage holders have a choice other than short sales? You bet. So, explore it should you have to.
If you are in need of a mortgage loan modification then you will need to become concerned of the mortgage loan modification requirements so you can get accepted for it. You need to understand how to fill your application form in a correct way and should also understand how to respond during the telephone interview. Should you properly manage this course of action, then you have a stronger possibility that your application will be accepted. So prepare yourself and collect more info about mortgage loan modification criteria.
During the paperwork process ensure that that you remove all unnecessary expenses from the financial statement in order to demonstrate to the lender that you’ll be able to afford to pay the home loan payment. Your payment needs to be approximately 30% of your monthly income. So plan all your expenses and spending budget by keeping this point in mind.
The next matter you need to keep in mind in order to fit the requirements is that you need to be presently residing in the house you are attempting to acquire a modification for. This really is a very crucial requirement that you need to follow. Second properties or family vacation houses do not typically qualify for loan modifications.
And so when it comes to fulfilling the mortgage loan modification requirements, the main strategy is producing an accurate financial statement. This is a very critical document that your lender will meticulously evaluate. The lender also needs to know your household income and your expenses in order to review your capacity to pay back.
Be sure that you satisfy the mortgage loan modification criteria, collect the needed paperwork, bank statements, income tax and other financial statements. Make certain that you manage all the paperwork correctly so that your application will be approved. This will help you come out of the present financial trouble in a better way.
So that you can guarantee approval, I strongly suggest you get assistance from loan modification experts. These professionals speak your lender’s vocabulary and have an understanding of the process required. Many modification services offer free evaluation to get going.
For anybody who has a mortgage, understanding how home loan modification programs work nowadays could be important. That’s because the economy, being in the shape it is, is forcing many more people to look at modifying their mortgages than was the case in the past. Fortunately, there are a number of programs, both governmental and private (from lenders), for doing so nowadays.
There’s a mistaken assumption among many people that they won’t be able to qualify for a loan modification from their lender, but that’s generally not the case nowadays. This is because the federal government has stepped in and started up a special modification program aimed at helping people stay in their homes, paying mortgages that have been modified such that they reduce the monthly payment.
The first thing to realize about any sort of modification is that it’s basically asking the lender to rewrite the terms of the home loan. It has to be done such that a lower monthly payment results or there’s no use in applying for it, to tell the truth. At its heart, the lender will be agreeing to write down at least a portion of the home loan in order to ensure a lower payment, in other words.
It’s the case that most lenders wouldn’t normally be amenable to such an action but, with economic circumstances being the way they are, more are coming on board every day. They all understand that it’s better to get at least a little of a home loan than to get nothing at all if it goes into foreclosure, in other words. And, with the government now involved, lenders are a bit more at ease in doing so.
Many lenders have also set up their own private modification programs, which should come as welcome news. If a person holding a mortgage doesn’t qualify for the government version, he might be able to qualify for a private lender version. It might not have as generous a term setup as the government program, but it should still result in a lower payment nonetheless.
It’s always much smarter to contact a lender about a modification at the beginning, when financial hardship first begins to rear its ugly head, than at the end when the loan is so far gone and into default that there’s almost nothing that can be done about it other than foreclosure. Taking care of the issue at the beginning might also result in more favorable new terms than waiting, for what it’s worth.
It should also be understood that no small amount of paperwork is normally involved when it comes to applying for a modification. Even the government will require a hardship letter — in which one lays out why one can’t make the current monthly payment — as well as proof of income sufficient to make the new payment, if the loan is modified.
Because the economy has caused many people to enter into financial hardship to one degree or another there are several home loan modification programs now in existence. Just remember that, to qualify for any of them, there will need to be enough income to show that payment ability exists. As well, contacting a lender well ahead of time may also help.
Need street-smart tips on getting Visit Rockwood’s site about DIY Loan Modification at
Millions of American homeowners had tons of savings, boatloads of equity in real estate and a great high-paying job before the recession and nothing has changed (except their home equity has slipped a bit). This message is for them – congratulations.
Another millions of other American homeowners had not reached such financial heights before the housing market meltdown. Some of them are young, just getting started on wealth-building. Others are less fortunate or not as well-connected. Some are in the midst of personal calamity like a divorce, death in the family or are really sick themselves. Others are working in causes that distract them from wealth-building…things like church, the environment, helping the homeless, AA, etc. And, some just have vocational priorities like teaching or preaching or other fields that don’t pay well.
And, finally, another millions of other American homeowners participated in a horrendous and shameful scam that foolishly, greedily and sometimes fraudulently enabled them to borrow too much money from the banks who borrowed too much from Wall Street who borrowed too much from the world…oh, my!These characters not only used that money to purchase dwellings near and even in “good” neighborhoods way above their class but they had the audacity to actually move their families into them! Wow! Everyone seems to agree that these guys can be dealt with by foreclosure.
There are heroes and villains, struggling with foreclosure, in each group. In my work as a foreclosure consultant I get on the phone and across the table from hundreds of struggling homeowners each month. ‘The vast majority in three groups are heroes – Americans just trying to extend our heritage of restlessness and hope for a better life for our families.
I bristle when I hear the industry pundits pander to smug viewers by attacking the members of the financial lower class. Certainly there are as many housing crisis villains in the wealthy upper-class as in the struggling lower-class.
So, lighten-up on snootiness. Let’s clean-up the mess but be fair. The blame game should be blind to socio-economic class. Because the blame’s all around.
Want street-smart tips on foreclosure help and ways to get Visit Rockwood’s site about DIY Loan Modification at
Does situations in your daily life give you no alternative but to file bankruptcy? These types of tough economic times have pressured lots of people to do the same; if you involved your property in the bankruptcy or maybe if you just need to move to get a new job or get closer to family, or for whatever purpose, you might be wanting to know about securing a home loan soon after bankruptcy. This is the best way to do it:
For starters, allow time to pass before attempting to acquire a new mortgage. Around 2 years is the typically established amount of time for many financial institutions to start considering you for a mortgage once again. Those 2 years provide you and your prospective loan providers time to take stock of your circumstances and indicate that you’ve had sufficient opportunity to bounce back and begin your own personal financial recovery.
Second, make sure to pay all of your bills promptly. Through this tough time period, it may be difficult to assure timely bill payment, despite having the help you obtained from your bankruptcy. Nevertheless, it is extremely crucial.
Also, you’ll need to ensure that anyone who’s receiving payments from you is accurately reporting your good standing to the credit bureaus. Acquire your annual free credit report, or perhaps even fork out a couple of bucks to get one more regularly than that. Should you be paying your bills punctually, but no one can see that, it’s just a good thing wasted.
Last but not least, begin obtaining the resources to offer a down payment. Whenever my credit rating was good, I didn’t require much of a down payment at all; at this point, however, following my bankruptcy discharge, if I need to purchase a house again, I’m going to require a significant amount of cash to pay down. You might, too.
For that reason start conserving as much as you can out of every pay. Pretty soon, you will be in a position to obtain a home mortgage and buy a house of your own.
Last year, we spent tons of time with clients to figure if they qualified for a mortgage modification. In 2010 it takes us about 10 minutes and is nearly perfectly accurate. It’s because the banks have become so very 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.
I say predictable because 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.
You’ll get a mod if 1) you have a typical hardship (income down, expenses upduh!), 2) your loan qualifies (non-jumbo, made before 1/1/09), your ratios are right, 3) you live in the home, and you are in default. That’s not to say that landlords have no hope they just have less likelihood of approval and should have lowered 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 throught he maze – time and again.
You should have the advantage of an insider, a street-smart advisor who has been at the game table for a long time. Someone who is unabashadly on your side – not a government entity and certainly not a bank employee or site. If you follow the advice of the government or bank sponsored entities you can only expect to get info tailored for the masses. That’s like going into a street-fight with training in only boxing. You are totally unprepared when the opponant kicks you in the ear! You’ll have to pay for such advice. But, you get what you pay for.
Interested in street-smart tips on Visit Rockwood’s site about DIY Loan Modification at
It’s just part and parcel of the mortgage modification process in 2010 – REJECTION! Lenders can’t deliver performance levels that satisfies anyone in spite of over two years of work and over eighteen months of financial incentives from the President’s Making Homes Affordable Modification Program (HAMP). Even well qualified applicants are getting rejected. Sometimes, more than once.
But, I have come to think that rejection is a very good sign! A review of my files over the past 6 months shows that not one single mortgage modification was granted without a prior rejection. That’s right, every one of the modifications I have completed for clients in 2010 has been rejected before being accepted. Even the ones that began with the encouraging Trial Modification resulted in a rejection of the Permanent Mod before final acceptance. Some of the mortgage modifications I have successfully managed were rejected as many as three times before we achieved the modification. Whew!
The application process alone is daunting. Then, weeks of follow-up is required to keep the application on-track. Now, in addition, homeowners must also become expert at overcoming the rejection objections that lenders throw in their way. That means being able to tactifully escalate problems to supervisors, managers, directors, VPs, and CEOs. That means being able to mobilize local congresspeople, regulatory agencies and even the press! It’s a challenge!
But, hey, quit with the whining! That is the way it is – so cope! You will get rejected for one of about two dozen common reasons. Sometimes I think they are posted as a type of “cheat sheet” on the computer monitors of new Loss Mitigation Agents. Things like “Your loan investor does not participate in modification programs”, “Failed the NPV calculation”, “Income too high”, “Your income is too low”, “You have too many assets”, “Your 4506-T has expired”, “Your Ratios are wrong”, “You did not provide updated docs”, “We need a note from your mommy (O.K., I made this one up!)”, and etc., etc., etc.
All of the reasons above can be valid. Sometimes they are. But, all too often, they are simply erroneous, and are the result of the lender having mismanaged the file or simply untrue statements that slow or end the application process if the borrower does not object. So, when you get rejected, press on. At least you’re not being ignored! Immediately demand (nicely!) an explanation of exactly why you were rejected. Go through several agents and escalate to a supervisor if you must to get the answer. Then, deal with it. Supply the missing document or sign the updated form or correct the data entry error on your income (No, it’s not $85,000 per month. It’s $850!) or do whatever it takes to get them back on track. You can request reconsideration when you submit the information or correction to the agent.If you have submitted a good and accurate application upfront, you will eventually be accepted and get the relief that the mortgage modification programs were intended to provide.
Take heart. What is worse than rejection is the months of total disregard and that most of us get in the mortgage modification process. It’s not likely to change anytime soon. Mortgage modifications will continue to be a great way to throttle the foreclosure rate and they are a great way for homeowners to get some relief. It’s just taking a lot more perseverance and nerve than it should!
Need help with your own Visit Rockwood’s site about DIY Loan Modification at
Sometimes waiting in line is smart. Like, for instance in the security line at the airport. However, if you are waiting in line for a loan modification, you’re nuts. In the line ahead of you are hundreds of thousands of frustrated homeowners just like you. Instead, you’ve got to get “Out-of-Line” and up to the front of the line. That’s right. Take cuts!
In the current Loan Modification Frenzy, the “line” is too long. Hundreds of thousands are in the queue ahead of you with more than 50,000 added per week. The banks can’t staff and train and manage and retain nearly enough workers and the systems and procedures are overwhelmed as well. Add to that the fact that the banks are only begrudgingly cooperating with the effort – and you have a formula for frustration and failure.
The front 4% of the line are getting good modifications. So, copy the winners, How do they do it? They get out-of-line and do extraordinary things. Previously I have described ways winners craft their applications and follow-up on the application to use what I call File Inertia. Let me now describe the way they escalate problems.
The broken process for evaluating loan modifications always produces problems. Erroneous rejections, incorrect assessments, unnecessary and redundant information, etc. I advise my clients to: 1. Ask 5 Times, 2. Escalate Well and 3. Escalate Well Beyond.
1. Ask 5 Times The common problems are easy. For instance, if they misplaced your 4506-T Form, send them another one. If they request 3 months of bank statements instead of the usual 2send ‘em in. But, when you get information from the agent that is just wrong, and you can’t seem to get them to perceive it…That’s when you should Ask 5 Times. Call back and try another agent, 5 times. That’s right, it’s not worth it to try to prove your point and sometimes the agent is just not trained well enough to ever understand your question or concern. If you burn through 5 agents and can’t get the “right” answer, then ESCALATE.
Escalate means going up the chain of commandasking a manager or supervisor to review the situation with you. I do this politely so as to minimize the offense to the agent but also confidently and pointedly. I will say (to the 5th agent) “Please connect me to the supervisor on duty, will you? This is just too important to me to let this go. I want to hear it from a supervisor”. Sometimes the agent will oblige. Sometimes the agent will argue with you. Sometimes (I believe) the agent will ask their cubicle-mate to pose as a manager. Sometimes the manager will have to call you back (lots of luck with this one). And sometimes a more informed, better trained person WILL actually take your call and add insight and solve the problem.
Escalate Well Beyond means taking your problem beyond the Loss Mitigation Department to seek assistance and support from other departments, or from bank executives, regulatory agencies, politicians, trade associations and even the press. Don’t think that your situation is too small for any of these entities to care about or to take action on. The secret to getting their support is to request it in a manner that indicates that you 1) have used all the correct channels already, 2) understand their role and have appropriate expectations for what they can do on your behalf, 3) know exactly what you want them to do and by when and 4) that you are the sort of person who will escalate right past them if they do not respond.
Escalations Well Beyond the Loss Mitigation Department are surprisingly effective. Several of my clients have had success getting CEOs, Congressmen and even a U.S. Senator to place a call on their behalf. Such intervention is almost always successful.
We’re all in this together (well, many of us are at least). And getting help is often just a case of knowing who to ask and what to ask for. Most people are genuinely sympathetic to those of us caught in the housing crisis. After all, it’s nearly most of us.
Rockwood, dubbed the “Loan Mod Mercenary”, has helped thousands get great loan mods despite the odds. ? Visit Rockwood’s site about DIY Loan Modification at
It’s not news that the housing meltdown continues in 2010. Just ask any one of the millions of homeowners who are receiveing Notices of Default this year.
1. Foreclosure rates remain high
2. Foreclosures rates are increasing in the best neighborhoods. High-end homes are now feeling the price pressure as a result.
3. The unemployment rate continues to rise. It is expected to continue to rise throughout 2010.
4. Commercial property in the US is the next major industry to implodefollowed by credit card companies.
5. Experts all agree that inflationary pressures will be a problem in the coming years. Deficit spending (borrowing) virtually insures it.
6. Bailouts proved to be controversial in many ways and are not expected to continue.
In fact, there’s no reason to expect that there will be ANY upward pressure on home prices in the near future. Actually, a recent report predicts that a full 48% of homeowners will be “upside-down” on their home mortgages by the end of the year. We are likely to see continued price erosion in the coming months before the decline stops and we bottom-out. The loan modification process is getting nastier. The backlog of cases is unmanageable, and growing every day. Banks can’t hire and train fast enough to keep up. Negotiators have as many as 300 files in their charge at one time! And the settlements are not adequate (witness the high percentage that are failing) and real, meaningful principal reductions seem like so much hype at this point.
Homeowners are advised to use every tool available to save your home! During the housing market boom, lenders loosened underwriting standards to sell more and more loans to meet the insatiable global demand for mortgage-backed securities. Loan originators cut corners to meet sales quotas. Lenders, brokers, appraisers, Realtors, and Home Inspectors participated in what has now been labeled predatory lending. Predatory Lending is clearly unethical and some of the actions are illegal. Some violations have remedies that are inconsequential to most borrowers. Some experts estimate that MOST Adjustable-rate mortgages made during the period 2003-2008 show evidence of violations of consumer protection laws. Whether by unintentional errors or through greed and disregard for the law, the violations may now provide leverage for homeowners to negotiate a good workout solution.
Following are the most common violations.
1. Charging fees without providing the services
2. Charging more (higher points) than needed to buy-down rate
3. Selling private mortgage insurance (pmi) in cases where it was not needed
4. Including single-premium life insurance policy (one that pays the mortgage if the borrower dies) and charging the premium in the loan – without adequate explanation of the product or the need for the product realtive to laon apporval.
5. Equity Stripping – refinancing so frequently that the fees charged “strip equity” and leave the homeowner in a risky position
6. Not fully disclosing loan terms
7. “Teaser” rates on adjustable-rate mortgages to entice borrowers to accept high-risk products
8. Facilitating the misrepresentation of facts (income, home value, assets, etc.) on the loan application to enable the borrower to borrow more than would otherwise be the case.
9. Selling a more expensive loan than the borrower could actually qualify for
10. Targeting poor, uneducated, elderly or minority groups with unfair loan products and taking advantage of their vulnerability
11. Failing to take into account “borrowers’ best interest”
12. Promising refinancing after a short period – to get buyers to agree to bad loan terms
What if I told you that your lender violated laws in at least seven instances during your loan process and what if one of those violations was serious enough to warrant a lawsuit! Would that give you confidence in negotiating for a modification? If there is evidence that the lender violated the laws in selling you a high interest-rate or high fee loan, or by illegally “assisting” you in preparing the documents, or by approving a bad loan, you may have additional leverage to use in your loan modification or even in a lawsuit. Lenders and others were pretty well versed in the law and how to skirt the fringes. So, often your findings will not reveal egregious violations. But, the audit may uncover “patterns of inappropriate actions” that show disregard for your rights and that caused you damage. The presentation of the “evidence” of violations that your case can be made and your purpose achieved.
I recommend a Forensic Loan Audit for clients if:
1. your loan was taken in the peiod 2002-2008
2. if the loan came from a broker (not an employee of the lender)
3. if loan is an ARM, negative-amortizing loan, “Pick-a-Pay” Option ARM loan, or interest-only type
4. if loan is a sub-prime loan (3+ points higher than the best loans at the time) or if it is an Alt-A loan
5. if the loan had any pre-payment penalties
6. if the loan is a stated-income loan
7. if you felt “hustled” to get the loan or sign the documents
8. If you were promised that your loan could be re-financed after a very short period (1-3 years) as persuasion to get you to accept “less-than-optimal” terms and costs
9. If your loan payment, including principal, interest, tax, insurance and homeowner’s association fees (HOA) exceeds 40% of your gross household income
10. If you were pressured to accept mandatory arbitration, limiting your legal rights.
Legal Action – worth it? The loan modification process is a negotiation. The more leverage you have the more likely it is that you will succeed. Proof of lender violations of TILA, RESPA, HOEPA or state or federal consumer protection laws can give you a significant advantage. Forensic Loan Audits are professional audits of the loan and the process used to qualify you and the property for the loan. They are extensive. They are performed by auditors, specially trained in spotting violations.
Three observations in 2010
I am convinced that workouts are concluded faster and better for borrowers who invest the time, energy and money into Forensic Loan Audits. Secondly, I have observed that the power of the information is in its effective use. By that I mean, that even luke-warm results from an audit can be used effectively in negotiations as an indication that you have the resolve and capacity to negotiate professionally. Finally, I’ve observed that often there are clear violations of a serious nature that can be readily identified. A deliberate, informed consumer can spot common violations without too much effort. Then, it’s simply a matter of finding a trustworthy auditor. More on this topic, next time.
Rockwood has been providing Loan Modification help to thousands since the housing meltdown began.? Visit Rockwood’s site about DIY Loan Modiification at
