BEWARE: Lenders Slick Tactics
WARNING!
Once you have entered into an agreement to have your loan modified and signed an authorization to represent, your lender may be QUICK to call you. This call will be made in an effort to offer you some kind of deal, which more than likely, will not be to your best long term interest. In some instances this change is a short term one; 3, 6, 8 or 11 month change then you go back to the same struggle. A loan modification is a permanent change for 30 to 40 years in most cases. Just be aware of what you accept, you should allow your negotiator to negotiate on your behalf before accepting ANY terms directly from lender (refer to blog Mortgage Companies Still Determine How Much Help is Given February 18, 2009).
While you are waiting to get your loan modified SAVE, SAVE, SAVE (as best as you can) one to two mortgage payments, some lenders are asking for some type of down payment. Also, due to the high default rate of previous loan modifications (approximately 50% default) lenders are offering payment arrangements for up to 3 months and then give clients a modification. This is in an effort to assure that the client is able to make the payments. This is still tough to negotiate, but it can be done.
Once you have entered into an agreement to have your loan modified and signed an authorization to represent, your lender may be QUICK to call you. This call will be made in an effort to offer you some kind of deal, which more than likely, will not be to your best long term interest. In some instances this change is a short term one; 3, 6, 8 or 11 month change then you go back to the same struggle. A loan modification is a permanent change for 30 to 40 years in most cases. Just be aware of what you accept, you should allow your negotiator to negotiate on your behalf before accepting ANY terms directly from lender (refer to blog Mortgage Companies Still Determine How Much Help is Given February 18, 2009).
While you are waiting to get your loan modified SAVE, SAVE, SAVE (as best as you can) one to two mortgage payments, some lenders are asking for some type of down payment. Also, due to the high default rate of previous loan modifications (approximately 50% default) lenders are offering payment arrangements for up to 3 months and then give clients a modification. This is in an effort to assure that the client is able to make the payments. This is still tough to negotiate, but it can be done.
Loan Modifications Getting Eaiser
Mortgage banks are making the job easier to get loan modifications done. Banks feel they have something to gain if your loan is modified. Remember the HOPE Now and the FHA modification programs, they promised to help thousands, well to date they have helped a combined 600 people approximately. There is no need to believe that any part of the Presidents Mortgage package is going to be different. Think of all the government and state backed programs that you can think of, okay now, how many of those programs are operating the way they should or to your satisfaction. New Jersey introduced their own mortgage plan but can’t get it off the ground because they are not offering enough financial incentive to attract quality employees to facilitate it.
If the government spent even an hour with the people who actually need help and that are genuinely attempting to make a better life for themselves and their families, they would see the flaws in the system. The banks were not interested in helping the borrower when there was an incentive to add hundreds of thousands of dollars in interest to the bottom-line, why would they jump at the opportunity to get $1000 per person.
What it really comes down to is how bad do you want your home and how hard will you work to keep it. The job to keep your home is not going to be an easy task without an advocate in your corner. Banks will offer the most lucrative plan that benefits their budget not yours. To an unaware consumer this is the option that they may take without exploring better alternatives. Remember “don’t be a statistic”, get help, PROFESSIONAL help.
If the government spent even an hour with the people who actually need help and that are genuinely attempting to make a better life for themselves and their families, they would see the flaws in the system. The banks were not interested in helping the borrower when there was an incentive to add hundreds of thousands of dollars in interest to the bottom-line, why would they jump at the opportunity to get $1000 per person.
What it really comes down to is how bad do you want your home and how hard will you work to keep it. The job to keep your home is not going to be an easy task without an advocate in your corner. Banks will offer the most lucrative plan that benefits their budget not yours. To an unaware consumer this is the option that they may take without exploring better alternatives. Remember “don’t be a statistic”, get help, PROFESSIONAL help.
YOU MAY NOT QUALIFY FOR HELP....on your own!!!
The Foreclosure Plan For People Not In Foreclosure
Under the new program rolled out by President Obama there are many stipulations. The plan does not help those who are in foreclosure or in default. If you as a home owner do not understand how to structure a financial expense and income sheet that your mortgage company wants to see, you will be denied a modification. As stated in a previous post the mortgage companies still determine "Who (gets modified) and How Much (of a modification)". Without having a professional assist you, you can change your new full time job description to "Saving My Home". Most people (80%) that attempt to "do it themselves" lose their savings and their home. Look we could fix or own cars, represent ourselves in court and even take a home remedy, but why would you when there are professionals that can do a much better job.
Now don't just get help from anybody investigate a few areas:
· Length of time in business
· Who is running the company and their background
· The track record. Can THEY provide Referrals?
· Before you spend a dime, can they give you a written guarantee
· Are they giving you a guarantee, either the modification will be done
· GUARANTEED and/or any money spent will be refunded back to you if it is not modified
The most important of all of these; can you track your progress yourself. Unfortunately you may not find out you are losing your home until it is too late. Do your homework and your due diligence, don't be a statistic.
Under the new program rolled out by President Obama there are many stipulations. The plan does not help those who are in foreclosure or in default. If you as a home owner do not understand how to structure a financial expense and income sheet that your mortgage company wants to see, you will be denied a modification. As stated in a previous post the mortgage companies still determine "Who (gets modified) and How Much (of a modification)". Without having a professional assist you, you can change your new full time job description to "Saving My Home". Most people (80%) that attempt to "do it themselves" lose their savings and their home. Look we could fix or own cars, represent ourselves in court and even take a home remedy, but why would you when there are professionals that can do a much better job.
Now don't just get help from anybody investigate a few areas:
· Length of time in business
· Who is running the company and their background
· The track record. Can THEY provide Referrals?
· Before you spend a dime, can they give you a written guarantee
· Are they giving you a guarantee, either the modification will be done
· GUARANTEED and/or any money spent will be refunded back to you if it is not modified
The most important of all of these; can you track your progress yourself. Unfortunately you may not find out you are losing your home until it is too late. Do your homework and your due diligence, don't be a statistic.
Obama foreclosure fix open for business
Federal officials release details of $75 billion loan modification and refinancing programs. Start contacting loan servicers.
Last Updated: March 4, 2009: 2:54 PM ET
NEW YORK (CNNMoney.com) -- The Obama administration's foreclosure prevention program is open for business.
The multipronged fix calls for companies to help as many 4 million struggling borrowers by modifying loans so housing payments are no more than 31% of monthly gross income. Separately, homeowners who haven't missed a payment can refinance into lower-cost loans even if they have little or no equity. This is expected to help up to 5 million homeowners.
The $75 billion loan modification plan will provide incentives to borrowers and loan servicers and investors to spur mortgage modifications. The government will also subsidize interest rate reductions to get borrowers to affordable monthly payments.
"This plan will help make home ownership more affordable for nine million American families and in doing so, help to stop the damaging impact that declining home prices have on all Americans," said Housing Secretary Shaun Donovan.
Administration officials once again stressed that they are not using taxpayer money to bailout irresponsible homebuyers, listing those who will not qualify for assistance: people who bought investment properties, lied on their mortgage documents or purchased multimillion dollar homes.
Borrowers can now contact their servicers to see whether they are eligible for assistance. Federal officials have posted additional information for borrowers to determine their eligibility at www.hud.gov. They will also promote the program at homeownership events nationwide.
Who's eligible for modification?
The administration Wednesday released additional eligibility criteria and program guidelines.
The loan modification plan focuses on people who are behind in their payments or are at risk of default.
Federal officials clarified the definition of "at risk" as those: suffering serious hardships, declines in income or increase in expenses; facing an interest rate hike; having high mortgage debt compared to income; owing more than their house is worth, or demonstrating other reasons for being close to default.
To participate in the loan modification plan, borrowers must:
have obtained their mortgage before Jan. 1, 2009;
have a primary mortgage of less than $729,500;
live in the property;
fully document their income by providing tax returns and pay stubs;
sign a statement of financial hardship;
and go for counseling if their total household debt - including auto loans, credit cards and alimony - totals more than 55% of their income.
The modification program will be in effect until the end of 2012, but loans can only be adjusted once.
Officials also unveiled more details on how servicers will modify the loans. First, they must reduce interest rates so that borrowers' total house payments are not more than 38% of their monthly income. The government will then subsidize servicers dollar-for-dollar to lower that ratio to 31% - but the interest rate can't go below 2%.
The new interest rate would then remain in place for five years, after which it will increase by 1 percentage point a year until it reaches either the original rate or the prevailing mortgage rate at the time of the modification, whichever is lower. This should prevent borrowers from suffering the "payment shock" that sent many borrowers with adjustable-rate mortgage into default in recent years.
If rate reductions aren't enough to get payments to 31% of income, a lender can extend the term up to 40 years, or shift part of the principal to the end of the loan at no interest. Servicers also have the option of reducing the loan's balance.
Servicers will receive $1,000 for each loan modified, as well as additional annual bonuses if borrowers keep up with payments. Mortgage investors will receive one-time $1,500 incentive payments for restructuring qualifying loans that are not yet delinquent. Finally, borrowers who keep up with their new payments will receive up to $1,000 a year in principal reduction, for up to five years.
While the program is voluntary, once servicers commit to participating, they must evaluate all loans that may be eligible. Financial institutions that receive government money going forward must participate.
Only loans where the cost of the foreclosure would be higher than the cost of modification would qualify.
The government is also providing incentives to servicers and borrowers to enter into "short sales" or "deed-in-lieu of foreclosure" agreements with those who can't afford to stay in their homes. In these cases, the bank agrees to take back the home for less than what's owed without filing for foreclosure.
The program also includes a new provision to eliminate borrowers' second mortgages, which will reduce their overall debt levels. Investors in those mortgages, who at times have blocked modifications because they don't benefit from the adjustments, will be paid to eliminate those claims. Details on how much they'll receive will be announced in coming weeks, senior government officials said. Servicers that get second-mortgage holders to participate will receive an additional $250.
The refinancing program
The refinancing program, which is open to homeowners who took out loans from Fannie Mae and Freddie Mac, allows borrowers with less than 20% equity in their homes to refinance to the current prevailing rate. However, borrowers cannot owe more than 105% of the value of their home and must be current on their payments.
The program ends in June 2010. Each servicer will provide details on the terms and costs associated with the refinancing program.
Be patient
While borrowers can now start contacting servicers, it may take several weeks for companies to implement the guidelines, said a senior mortgage industry official in a conference call with reporters.
Servicers are adding staff to handle the expected deluge of calls. Bank of America, for instance, just boosted its servicing staff by 1,000 people.
Still, officials warned borrowers - many of whom have complained of long waits and unresponsive staff at servicers - to be patient.
"There will definitely be a flood of activity, so it's important for consumers to be patient and be persistent and to take a hard look at their own personal financial situation so they can come prepared to really move the process forward as rapidly as possible," the officials said.
First Published: March 4, 2009: 9:
Last Updated: March 4, 2009: 2:54 PM ET
NEW YORK (CNNMoney.com) -- The Obama administration's foreclosure prevention program is open for business.
The multipronged fix calls for companies to help as many 4 million struggling borrowers by modifying loans so housing payments are no more than 31% of monthly gross income. Separately, homeowners who haven't missed a payment can refinance into lower-cost loans even if they have little or no equity. This is expected to help up to 5 million homeowners.
The $75 billion loan modification plan will provide incentives to borrowers and loan servicers and investors to spur mortgage modifications. The government will also subsidize interest rate reductions to get borrowers to affordable monthly payments.
"This plan will help make home ownership more affordable for nine million American families and in doing so, help to stop the damaging impact that declining home prices have on all Americans," said Housing Secretary Shaun Donovan.
Administration officials once again stressed that they are not using taxpayer money to bailout irresponsible homebuyers, listing those who will not qualify for assistance: people who bought investment properties, lied on their mortgage documents or purchased multimillion dollar homes.
Borrowers can now contact their servicers to see whether they are eligible for assistance. Federal officials have posted additional information for borrowers to determine their eligibility at www.hud.gov. They will also promote the program at homeownership events nationwide.
Who's eligible for modification?
The administration Wednesday released additional eligibility criteria and program guidelines.
The loan modification plan focuses on people who are behind in their payments or are at risk of default.
Federal officials clarified the definition of "at risk" as those: suffering serious hardships, declines in income or increase in expenses; facing an interest rate hike; having high mortgage debt compared to income; owing more than their house is worth, or demonstrating other reasons for being close to default.
To participate in the loan modification plan, borrowers must:
have obtained their mortgage before Jan. 1, 2009;
have a primary mortgage of less than $729,500;
live in the property;
fully document their income by providing tax returns and pay stubs;
sign a statement of financial hardship;
and go for counseling if their total household debt - including auto loans, credit cards and alimony - totals more than 55% of their income.
The modification program will be in effect until the end of 2012, but loans can only be adjusted once.
Officials also unveiled more details on how servicers will modify the loans. First, they must reduce interest rates so that borrowers' total house payments are not more than 38% of their monthly income. The government will then subsidize servicers dollar-for-dollar to lower that ratio to 31% - but the interest rate can't go below 2%.
The new interest rate would then remain in place for five years, after which it will increase by 1 percentage point a year until it reaches either the original rate or the prevailing mortgage rate at the time of the modification, whichever is lower. This should prevent borrowers from suffering the "payment shock" that sent many borrowers with adjustable-rate mortgage into default in recent years.
If rate reductions aren't enough to get payments to 31% of income, a lender can extend the term up to 40 years, or shift part of the principal to the end of the loan at no interest. Servicers also have the option of reducing the loan's balance.
Servicers will receive $1,000 for each loan modified, as well as additional annual bonuses if borrowers keep up with payments. Mortgage investors will receive one-time $1,500 incentive payments for restructuring qualifying loans that are not yet delinquent. Finally, borrowers who keep up with their new payments will receive up to $1,000 a year in principal reduction, for up to five years.
While the program is voluntary, once servicers commit to participating, they must evaluate all loans that may be eligible. Financial institutions that receive government money going forward must participate.
Only loans where the cost of the foreclosure would be higher than the cost of modification would qualify.
The government is also providing incentives to servicers and borrowers to enter into "short sales" or "deed-in-lieu of foreclosure" agreements with those who can't afford to stay in their homes. In these cases, the bank agrees to take back the home for less than what's owed without filing for foreclosure.
The program also includes a new provision to eliminate borrowers' second mortgages, which will reduce their overall debt levels. Investors in those mortgages, who at times have blocked modifications because they don't benefit from the adjustments, will be paid to eliminate those claims. Details on how much they'll receive will be announced in coming weeks, senior government officials said. Servicers that get second-mortgage holders to participate will receive an additional $250.
The refinancing program
The refinancing program, which is open to homeowners who took out loans from Fannie Mae and Freddie Mac, allows borrowers with less than 20% equity in their homes to refinance to the current prevailing rate. However, borrowers cannot owe more than 105% of the value of their home and must be current on their payments.
The program ends in June 2010. Each servicer will provide details on the terms and costs associated with the refinancing program.
Be patient
While borrowers can now start contacting servicers, it may take several weeks for companies to implement the guidelines, said a senior mortgage industry official in a conference call with reporters.
Servicers are adding staff to handle the expected deluge of calls. Bank of America, for instance, just boosted its servicing staff by 1,000 people.
Still, officials warned borrowers - many of whom have complained of long waits and unresponsive staff at servicers - to be patient.
"There will definitely be a flood of activity, so it's important for consumers to be patient and be persistent and to take a hard look at their own personal financial situation so they can come prepared to really move the process forward as rapidly as possible," the officials said.
First Published: March 4, 2009: 9:
Processing Vs. Negotiating. Processors are paper-pushers not loan negotiators.
Editorial by Brian Suder of HRP
Monday March 2nd, 2009
Over the past year many start-up companies jumped
into loss mitigation and attempted to define their place in this industry. In reality, 90% of the people involved with loss mitigation start-ups are green and don’t fully understand the complexities associated with loan modification. They make statements like, “I hire this company to do our processing”. If the people running these companies think negotiating a home loan from foreclosure is the duty of a processor, then they are in for a surprise.
Home Rescue Programs’ success rate is higher than any other firm in the country. Our three (3) phase process is the backbone of this achievement.
Phase 1: Hire a team of seasoned & over qualified underwriters. These underwriters have all previously worked for some of the top lenders including Wells Fargo, Countrywide, Option One, New Century....the list goes on. Their qualifications include 10+ years of underwriting experience, passing strict personality tests, and organizational assessments. Why underwriters you may ask? Seasoned underwriters have the analytical mind set, necessary to negotiate a home loan. In fact, most lenders hire former underwriters for their own loss mitigation departments. Underwriters know how to communicate with fellow underwriters. The bottom line is the lender only cares for what is in its best interests. The lender also has a fiduciary responsibility to its stock holders and investors. So we map out the full costs and ultimately the loss the lender will endure by foreclosing on a homeowners’ loan in today’s depressed real estate market. We customize each proposal for each individual homeowner. We show the lender why a performing loan is better for them than a foreclosure.
Phase 2: Most loan modifications are negotiated in phase one, but sometimes lenders want to play hard ball. When this happens, we bring out our Forensic Loan Auditors. These analysts conduct a full review of the homeowners’ loan documents to reveal lender mistakes in RESPA, ECOA, HMDA, TILA and APR. Because such a large number of loan docs were drawn between 2001 to 2007, many mistakes were made during this time. We show the lender the serious legal mistakes it made and use the results of this audit as leverage. Many times this additional tool provides the weight necessary to obtain the modification.
Phase 3: Bring out the attorneys. If the lender is still not being nice, our attorneys take over. We don’t like to bring in our attorneys until phase 3 for a variety of reasons. Primarily, we have a good relationship with the major lenders and service providers. Our attorneys take a vastly different approach. They show the lender all of its legal blunders reveled in the audit. They aggressively advise the lender as to what it did wrong. Lenders don’t like hearing that. Furthermore, our legal team can pursue a series of other tactics that includes asking for the original note. This simple request can stall a sale date for well over a year. By this time our attorneys usually have enough ammo to pursue a case against the lender. In such cases, the settlement typically results in a loan modification.
Monday March 2nd, 2009
Over the past year many start-up companies jumped
into loss mitigation and attempted to define their place in this industry. In reality, 90% of the people involved with loss mitigation start-ups are green and don’t fully understand the complexities associated with loan modification. They make statements like, “I hire this company to do our processing”. If the people running these companies think negotiating a home loan from foreclosure is the duty of a processor, then they are in for a surprise.Home Rescue Programs’ success rate is higher than any other firm in the country. Our three (3) phase process is the backbone of this achievement.
Phase 1: Hire a team of seasoned & over qualified underwriters. These underwriters have all previously worked for some of the top lenders including Wells Fargo, Countrywide, Option One, New Century....the list goes on. Their qualifications include 10+ years of underwriting experience, passing strict personality tests, and organizational assessments. Why underwriters you may ask? Seasoned underwriters have the analytical mind set, necessary to negotiate a home loan. In fact, most lenders hire former underwriters for their own loss mitigation departments. Underwriters know how to communicate with fellow underwriters. The bottom line is the lender only cares for what is in its best interests. The lender also has a fiduciary responsibility to its stock holders and investors. So we map out the full costs and ultimately the loss the lender will endure by foreclosing on a homeowners’ loan in today’s depressed real estate market. We customize each proposal for each individual homeowner. We show the lender why a performing loan is better for them than a foreclosure.
Phase 2: Most loan modifications are negotiated in phase one, but sometimes lenders want to play hard ball. When this happens, we bring out our Forensic Loan Auditors. These analysts conduct a full review of the homeowners’ loan documents to reveal lender mistakes in RESPA, ECOA, HMDA, TILA and APR. Because such a large number of loan docs were drawn between 2001 to 2007, many mistakes were made during this time. We show the lender the serious legal mistakes it made and use the results of this audit as leverage. Many times this additional tool provides the weight necessary to obtain the modification.
Phase 3: Bring out the attorneys. If the lender is still not being nice, our attorneys take over. We don’t like to bring in our attorneys until phase 3 for a variety of reasons. Primarily, we have a good relationship with the major lenders and service providers. Our attorneys take a vastly different approach. They show the lender all of its legal blunders reveled in the audit. They aggressively advise the lender as to what it did wrong. Lenders don’t like hearing that. Furthermore, our legal team can pursue a series of other tactics that includes asking for the original note. This simple request can stall a sale date for well over a year. By this time our attorneys usually have enough ammo to pursue a case against the lender. In such cases, the settlement typically results in a loan modification.
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