Loan Modification Hope

Making Home Affordable: Program’s Loan-To-Value Limit May Soon Change

Michael E. Riley — Mon, 29 Jun 2009 21:22:18 +0000

The “Making Home Affordable” program introduced by the Obama administrationis may soon change to allow higher LTV (Loan-To-Value) ratios which in turn will open the program to more borrowers, particularly those with upside-down mortgages (mortgages where loan amount signifficantly exceeds the property value due to falling home prices).

The program is currently open to the borrowers who’s loan amounts are up to 105% of the property value and are owned or guaranteed by the Fannie Mae and Freddie Mac agencies, which are currently sponsored by the US government.

The Director of Federal Housing Finance Agency James Lockhart has acknowledged in a press conference that the current LTV limit of 105% is being re-considered, however he did not reveal the new LTV figure.

Media reports that LTV limit could be raised to as much as 125% which could theoretically include up to an additional 10% of the borrowers to qualify for the program.

Tags:government loan modification,Making Home Affordable,upside down loan modification

Positive Results Reported Due To Loan Modification Programs, According to FDIC’s Bair

Michael E. Riley — Tue, 16 Jun 2009 15:51:55 +0000

Sheila Bair, the chairman of the Federal Deposit Corp has noted that the loan modification efforts are having positive results, but their ultimate success will most likely depend on the economy and mortgage market.

“My sense is that it’s having an impact,” … but “there is obviously still distress in the mortgage market” Bair said in answering questions after a speech to the Chicago Federal Reserve Bank’s annual bank structure conference.

According to Bair, most mortgage holders will continue making their monthly payments if they are brought down to the affordable level, regardless of whether they are in the upside-down mortgage scenario or not. Upside-down mortgage refers to a condition when a home value is lower than the mortgage owed on the property.

Loan workouts are traditionally more difficult to pursue if the credit distress is driven by a life event, such as loss of a job or disability, when compared to the workouts as a result of a structural problems with the loan itself.

Sheila Bair said she would like to see the secondary mortgage market “come back in the right way” with “the right incentive structure” after being a casualty of the financial crisis that started in 2007.

Bair said the agency had added 1,000 staff in the past and is still hiring, commenting on the FDIC’s workload during the recent spate of bank failures.

Tags:fdic,government loan modification programs,loan modification

FHA Streamline Refinance: What You Need to Know

Michael E. Riley — Tue, 19 May 2009 18:32:49 +0000

“FHA Streamline Refinance” refers to a process of refinancing a FHA mortgage and specifically the amount of documentation and underwriting that is required to be completed by the lender. The process (as any refinance) involves certain closing costs that are either paid up-front or rolled into the amount of refinance.

The requirements for the FHA Streamline Refinance are as follows:

The mortgage to be refinanced must already be FHA insured
The mortgage to be refinanced should be current and in good standing (not delinquent).
The refinance is to result in a lowering of the borrower’s monthly principal and interest payments.
No cash may be taken out on mortgages refinanced using the streamline refinance process.

There are a few different ways the lenders may offer FHA streamline Refinance. Some may offer it at no out-of-pocket costs by charging a higher interest rate on the new loan. Charging this premium allows the lender to pay the closing costs associated with the refinance.

Other lenders may offer FHA streamline refinance by rolling the closing costs into the amount of the new mortgage. Of course this can only be done if the property equity allows for such transaction. This is determined by an appraisal, however the new loan amount cannot exceed the original loan amount.

Properties where the borrower does not reside as their primary residence (such as investment properties) may only be refinanced without an appraisal.

Tags:FHA Streamline Refinance,government loan modification programs

Official FDIC Loan Modification Guidelines

Michael E. Riley — Wed, 08 Apr 2009 16:44:44 +0000

This guide provides an overview of the FDIC’s program to assist bankers, servicers, and investors in this process. It outlines FDIC program terms at IndyMac Federal Bank, offers insight into the specific portfolio characteristics that drive modification modeling at that bank, and provides a framework for developing and implementing a similar program at your institution.

Federal Deposit Insurance Corporation (FDIC) official Loan Modification Guidelines.

FDIC “Loan Mod in a Box” additional Loan Modification Tools

Background

Although foreclosures are costly to lenders, borrowers and communities, the pace of loan modifications continues to be extremely slow (around 4 percent of seriously delinquent loans each month). It is imperative to provide incentives to achieve a sufficient scale in loan modifications to stem the reductions in housing prices and rising foreclosures.

Modifications should be provided using a systematic and sustainable process. The FDIC has initiated a systematic loan modification program at IndyMac Federal Bank to reduce first lien mortgage payments to as low as 31% of monthly income. Modifications are based on interest rate reductions, extension of term, and principal forbearance. A loss share guarantee on redefaults of modified mortgages can provide the necessary incentive to modify mortgages on a sufficient scale, while leveraging available government funds to affect more mortgages than outright purchases or specific incentives for every modification. The FDIC would be prepared to serve as contractor for Treasury and already has extensive experience in the IndyMac modification process.

Basic Structure and Scope of Proposal
This proposal is designed to promote wider adoption of such a systematic loan modification program:

by paying servicers $1,000 to cover expenses for each loan modified according to the required standards; and
sharing up to 50% of losses incurred if a modified loan should subsequently re-default

We envision that the program can be applied to the estimated 1.4 million non-GSE mortgage loans that were 60 days or more past due as of June 2008, plus an additional 3 million non-GSE loans that are projected to become delinquent by year-end 2009. Of this total of approximately 4.4 million problem loans, we expect that about half can be modified, resulting in some 2.2 million loan modifications under the plan.

Details on Program Design

Eligible Borrowers: The program will be limited to loans secured by owner-occupied properties.

Exclusion for Early Payment Default: To promote sustainable mortgages, government loss sharing would be available only after the borrower has made six payments on the modified mortgage.

Standard NPV Test: In order to promote consistency and simplicity in implementation and audit, a standard test comparing the expected net present value (NPV) of modifying past due loans compared to the strategy of foreclosing on them will be applied. Under this NPV test, standard assumptions will be used to ensure that a consistent standard for affordability is provided based on a 31% borrower mortgage debt-to-income ratio.

Systematic Loan Review by Participating Servicers: Participating servicers would be required to undertake a systematic review of all of the loans under their management, to subject each loan to a standard NPV test to determine whether it is a suitable candidate for modification, and to modify all loans that pass this test. The penalty for failing to undertake such a systematic review and to carry out modifications where they are justified would be disqualification from further participation in the program until such a systematic program was introduced.

Reduced Loss Share Percentage for “Underwater Loans”: For LTVs above 100%, the government loss share will be progressively reduced from 50% to 20% as the current LTV rises.¹ If the LTV for the first lien exceeds 150%, no loss sharing would be provided.

Simplified Loss Share Calculation: In order to ensure the administrative efficiency of this program, the calculation of loss share basis would be as simple as possible. In general terms, the calculation would be based on the difference between the net present value of the modified loan and the amount of recoveries obtained in a disposition by refinancing, short sale or REO sale, net of disposal costs as estimated according to industry standards. Interim modifications would be allowed.

De minimis Test: To lower administrative costs, a de minimis test excludes from loss sharing any modification that did not lower the monthly payment at least 10 percent.

Eight-year Limit on Loss Sharing Payments: The loss sharing guarantee ends eight years of the modification.

Tags:fdic,government foreclosure help,hasp loan,loan modification,mortgage relief

Explaining the Obama Loan Modification in Simple Terms

Michael E. Riley — Tue, 31 Mar 2009 19:52:51 +0000

By default, most people are optimists. We all like to think that if our government creates a policy in a time of a crisis we can all depend on it to fix the problem at hand. The Obama administration has moved very quickly to address the housing problems that we all face as a nation and I applaud the effort. Many call it the “Obama Loan Modification”. It is unclear, however, if the Obama Loan Modification effort is going to reach as many people as may need it. For some of these people the effort is the last resort before crossing into poverty.

There are many blog posts and news reports out there describing the plan, usually riddled with technical terms and formulas that are hard to follow. In reality the rules of the Obama Loan Modification are fairly simple. You can qualify if:

Your total monthly housing costs (mortgage, taxes, insurance, Homeowners Association fees etc…) are greater than 31% of your average gross monthly income.

Example of calculation:

Gross Monthly Income: $2000

Combined Housing Costs: $800

Your Percentage: 800/2000*100 = 40%

If your housing costs are over 38% of your monthly income, the mortgage company is partially compensated by the government to reduce that ratio to at least 38% by whatever means available. Such means include increase of the loan term, decrease of the interest rate as well as others. The important thing to remember here is that the lender participation is voluntary.

You have not originated your loan after January 1, 2009 – Simple enough: they want to make sure you didn’t close your loan after the January 1st deadline. Any date before that is acceptable.

The property has no more than 4 units. 5-unit or larger properties are excluded from the Obama Loan Modification plan

You must occupy the property. Rental and investment properties are excluded to ensure the plan helps those who need it most.

You must be experiencing financial hardship. What this means is that you have to be able to explain the reason you can no longer afford you monthly payments. These reason can range from dramatic increase in monthly expenses to loss or reduction of income.

Your current loan balance must be under $729,750 as of the 1st day of 2009

The Obama Loan modification plan at the very least has given guidance to an industry that truly needs it. At its best — millions of homeowners will once again be able to afford their houses and our economy will start to bounce back over time with a new confidence in the housing market and our nation.

Tags:hasp,hasp loan,obama loan modification,upside down loan

Have You Heard About A Loan Remodification?

Michael E. Riley — Fri, 27 Mar 2009 15:41:46 +0000

Remodification is a term that many people use when they are speaking about a loan modification. If you read a newspaper, watch television, surf the internet or even have a drink at your local neighborhood bar you can’t escape it, loan modification is a new buzz word. There is a good chance you are even considering a loan re-modification for yourself. Just in case you have limited contact with the outside world, I will give you the basics. A loan remodification is when you change the terms of your loan with the lender you currently have, without refinancing. The reasons are as varied as the people that need them, but the most important one is to make sure the homeowners can stay in their home and continue to make payments that are relatively affordable.

This is where things can get confusing: a loan remodification is doing the same as mentioned above after you have already successfully went through the process the first time. The problems begin when the modification is accepted just because it’s better than what someone may have now, but it’s not good enough long-term for that homeowners overall situation. Most banks don’t make it easy for homeowners to modify the first time around, that’s why so many people are turning to companies with experience, such as a non-profit or a law firm. The second time is even harder: a loan remodification means it didn’t work the first time. Why go through the effort again for no reason, can be the bank’s rationale.

This in my opinion is why a certifed representative working on your behalf, can be so valuable. If you are in a situation where you have already modified your loan and it doesn’t look like it’s going to work, contact your lender or someone who can work on your behalf with them. If you are going to have a chance in making your loan remodification work, the best bet is to do it before you become delinquent again.

Tags:loan modification,nonprofit loan modification,remodification

Heartbreaking Video Footage of Foreclosure Evictions

Michael E. Riley — Fri, 20 Mar 2009 18:39:14 +0000

Chris Hansen of Dateline NBC follows police with a camera crew while evictions are being conducted. The eviction victims are interviewed. This truly is a heartbreaking video. Be sure to explore your loan modification options and prevent foreclosure from happening. It is now easier than ever to perform loan modification and a number of government-subsidized programs have been created to help the struggling homeowners. Give us a call if you are unsure if the program applies to you.

Tags:loan modification,non-profit,prevent foreclosure

Loan Modification Company Vs DIY Modification

Michael E. Riley — Wed, 18 Mar 2009 16:11:24 +0000

After months of falling foreclosure rates filings are on the rise again. This comes as another wave of homeowners see their rate on their ARM (adjustable rate mortgages) rise and reset to higher monthly payment amounts at the end of last year. This is primarily due to Option Arm Loans where the interest of the loan is able to be deferred until a later date. That date for an unusually high number of homeowners came due at the end of last year and the beginning of this year.

Typically these type of loans have a cap built in to protect borrowers from getting stuck with an unreasonable payment amount however the downward spiraling of home values has pushed the loans to their cap sooner than expected. The cap allows the principal to accrue to a percentage of a homes value, in many cases this is 120%. Due to the current dip in home values the balances on these loans have already reached the max, forcing homeowners to pay the principal & interest payments they weren’t expecting to pay for years – payments which many cannot afford to make.

As we are all too aware job losses are still on the rise and there is no clear sign that the vicious cycle is coming to an end any time soon. As part of the new efforts put forth by the Obama administration new opportunities are available for homeowners who find themselves in this situation. Borrowers who wanted to refinance in the past but could not qualify because their properties have lost value may be able to get a new more affordable rate meaning a lower payment.

There are a few indicators to consider when determining if you are eligible for this type of loan re-modification. First, is your loan held or guaranteed by Fannie Mae or Freddie Mac? Second, is your property a primary residence? Third, is your first loan amount equal to or less than 105% of your current property value? If you can answer yes to all 3 of these indicators then you are one step closer to getting off the track of foreclosure.

Re-negotiating your loan directly with the bank can be a daunting task at best. Imagine how much the bank does NOT want to loose money and then combine that fact with the reality that they are the ones that “set the rules” for what rate they will offer in the re-negotiation. You are clearly the underdog in this match.

Reportedly more and more homeowners contact non-profit loan modification companies after hitting the wall trying to negotiate with banks directly. Contacting a non-profit company to assist with the negotiations has proven to be a benefit to thousands of borrowers to date. The non-profit already has a relationship with the banks and experience re-negotiating loans for struggling homeowners. They know how low the bank can go and what rate other struggling homeowners in similar scenarios have received. Non-profit companies also know the logistics of the new government plans, such as HASP, Making Home Affordable, etc. and finding the right plan for you even if you don’t know what plan you want to utilize, if one is available.

Tags:loan modification company,prevent foreclosure,upside down loan

Prevent Mobile Home Foreclosure With Loan Modification Program

Adam — Sat, 14 Mar 2009 00:34:25 +0000

Mobile Home in Arizona

When mobile homes were first being sold, most did not qualify for traditional mortgages, as most lenders treated them much the same a vehicle sales. After all, a buyer who could not make their payments could hook them up to a truck and drive them away to avoid mobile home foreclosure. However, as more people began buying mobile homes and they became more a part of the landscape, lenders became more acceptable to providing financing and when a homeowner could not make their payments, mobile home foreclosure began as opposed to repossession as in auto loans.

Typically, the price of a mobile home is considerably less than a traditional home and during a mobile home foreclosure, the land on which it is located, is usually not included in the sale. This type of unique situation exists because the home can be bought and moved by a new owner and the land sold separately by the mortgage holder. Additionally, homes reclaimed during a mobile home foreclosure can be moved to a sales lot and sold as used and not necessarily by auction.

Loan Determines How Money Is Collected

Credit collection laws may vary slightly by state, but federal laws also govern the process of disposing of property confiscated in a mortgage foreclosure. With the homes being on wheels, moving them off the property may also reduce their value, especially if the new buyer is putting them into a mobile home community instead of on private land.

Depending on the type of financing obtained by the original buyer, the mobile home foreclosure process will be similar to the foreclosure process of a traditional home. The lender has to go to the local court and show that the borrower has not fulfilled their financial obligation and the only way for the lender to be repaid is to have the court sell the property on their behalf. Once approved for sale, the mobile home is put on the auction block and any money over what is owed on the home goes to the owner.

Despite being similar to repossession of a vehicle, if the home loan was granted in the form of a mortgage in partnership with the land on which it sits, the land and home may be sold together. However, in most instances of a mobile home foreclosure the land can be sold separately, unless it is a part of the original loan with the value of the land included in the collateral for the purchase of the mobile home.

Tags:mobile home,mobile home foreclosure,mobile home loan modification

All About The Foreclosure Refinance

Michael E. Riley — Tue, 10 Mar 2009 21:38:17 +0000

When it comes to being behind on the mortgage payment, there is nothing worse because your home is the biggest bill you have and the one that is probably the most important. So when you are not able to pay the mortgage company, you are probably not able to pay a lot of other companies. This means that your credit has taken a huge hit and you are probably getting collection calls left and right from people who want their money and they want it now. If you do not have the cash on hand to bring your account up to date, then a foreclosure refinance may be your best option.

A foreclosure refinance is where you get your loan refinanced while you are in the middle of a foreclosure process. Luckily, laws allow for homeowners to seek that option of foreclosure financing in order to help save their home. A foreclosure refinance is not going to be cheap though and there is probably going to be some up front money that will be needed to close the loan. Also keep in mind that your interest rates are not going to be all that great when doing a foreclosure refinance.

How To Get It Done

The best thing to do is to start calling around in order to see who can help you with a foreclosure refinance and what it is going to cost you out of pocket. Once that is said and done make sure that you are comparing interest rates that are being offered to you. Keep in mind that because of the hits on your credit for non-payment, you are not going to be offered the best rates out there but you still can be careful with what you sign for. A foreclosure refinance does not mean that you have to be taken advantage of.

And when you finally decide it is time to start looking for a foreclosure refinance you need to make sure what time limit you have. Depending on the state your home is in is going to determine how much time you truly have. A foreclosure refinance could take a little bit of time so you have to make sure that you have that time to spare. You certainly do not want to go through all of this just to have the house taken away at a foreclosure sale and you went through all of that time and trouble for nothing.

If you found yourself in this situation, feel free to give us a call (1-866-236-8896) or apply online. We will personally review your scenario and let you know if we can help. There are a number of government mortgage modification (also known as the mortgage relief) programs currently available that may or may not apply in your particular case. We may be able to help you reduce your mortgage payment and adjust your mortgage to the current value of your home thus preventing foreclosure.

Tags:foreclosure refinance,loan morification,mortgage relief

Loan Modification Hope

Making Home Affordable: Program’s Loan-To-Value Limit May Soon Change

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Positive Results Reported Due To Loan Modification Programs, According to FDIC’s Bair

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FHA Streamline Refinance: What You Need to Know

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Official FDIC Loan Modification Guidelines

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Explaining the Obama Loan Modification in Simple Terms

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Have You Heard About A Loan Remodification?

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Heartbreaking Video Footage of Foreclosure Evictions

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Loan Modification Company Vs DIY Modification

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Prevent Mobile Home Foreclosure With Loan Modification Program

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All About The Foreclosure Refinance

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