Upside Down Mortgage

Archive for October, 2008

Mortgage Modification Success Rate

A mortgage modification is restructuring your current loan with your lender to change the monthly mortgage payment to an affordable amount.  This is your first line of defense when you have decided you want to stay in your home, but your current mortgage payments are no longer affordable.  This could be due to an adjustable rate mortgage which went up, loss of income or any combination of factors. 

How Does A Mortgage Modification Work?

A mortgage modification works by changing the loan terms with your lender. This is done by lowering the interest rate, loan extension, or in certain circumstances reducing the principal (amount owe) on the loan.

Mortgage Modification Scenario A: Lower Interest Rate as an example:

Let’s say you have a 30-year loan for $200,000 at 7.0% interest.  Your monthly payments of principal and interest would be $1,330.60.  Your lender agrees to lower your interest rate for a set number of years, normally two to three. For the next two years your lender lowers the interest rate 4.5%.  This changes your monthly mortgage payment to $1,013.37, a savings of over $300.00/month for those two years.

Mortgage Modification Scenario B: Loan Extension

Your current loan is for $200,000 at 6.0% for 15 years. The monthly payments of principal and interest come to $1,687.71.  If the lender agrees to extend the loan terms to a 30-year fixed rate loan, the same $200,000 loan at 6.0% is now a monthly payment of only $1,199.10 resulting in a savings of almost $500 a month!

Mortgage Modification Scenario C: Principal Reduction

This example is less common than A or B.  It is when the lender agrees to reduce the amount of principal owed on the loan.  This occurs when you are able to show the lender the property has suffered a significant decrease in value and you are considering walking away from the house and will no longer make payments.

Since you are never going to recoup any of the lost equity, you refuse to throw away good money after bad on this investment.  The lender is threatened with foreclosure.  It is a bold move and requires nerves of steel.  You are telling the lender, “This house has gone down so much in value it is now worthless to me.  I don’t care what happens to it. I am never going to get my money out of it with the current loan terms so you might as well just take it back. However, if you are willing to renegotiate this loan based on the properties current value, I am willing to stay.”  Essentially, you are offering to buy the house back as if it has already gone into foreclosure but with new loan terms.

I have seen this strategy done successfully, but it is difficult to pull off.  If you are successful in doing so, the end result is potentially having a house with principal and loan terms changed from a $200,000 mortgage at 7.0% for 30 years with a monthly payment of principal and interest of $1,330.60 to a $125,000 loan at 5.5% for 30 years with a monthly payment of principal and interest of $709.74.  This is a savings to you of almost $700/month. Definitely a high risk, high reward mortgage modification strategy! If you want to know more about what is a mortgage modification, download our free DIY loan modification kit.

About the Author:

Visit Us to get your free DIY loan modification kit. This DIY loan mod kit includes up-to-date lender forms, loan mod worksheets, step-by-step instructions, Bank Rolodex with bank telephone numbers, email address, and mailing addresses, and much more! This 200+ page Loan Modification Kit you teach you everything you need to know to lower interest rates, lower your monthly payments, stop foreclosure, prevent foreclosure, and save your home today! 100% free! Get started today on your journey to secure ownership. -Bobby Tucker

Article Source: ArticlesBase.com - What is A Mortgage Modification?

A Loan Modification Can Help You Save Your Home From Foreclosure!

If you're new around here, you might want to subscribe to our Upside-Down Mortgage RSS feed. It's quite likely the only feed of it's type on the internet!

Mortgage Relief Law Center Scam

Federal Trade Commission (FTC) Chairman Jon Leibowitz was recently joined by California Attorney General Jerry Brown to announce the initiation of “Operation Loan Lies”, a coordinated national law enforcement effort to crack down on mortgage loan modification scams.

The operation has already filed 189 actions by 25 federal and state agencies against fraudulent loan shops that used deceptive marketing to push their shabby or non-existent foreclosure rescue and mortgage modification services. The actions involve homeowners across the country but were announced in Southern California, where the fraudulent companies were based. “These con artists see the high foreclosure rates as an opportunity to prey on people in distress,” FTC Chairman Jon Leibowitz said. “They promise to rescue homeowners in troubled financial waters, but after they take their money they throw them an anchor instead of a lifeline.”

In conjunction with the announcement the FTC gave details on four additional lawsuits which brings the total of mortgage foreclosure rescue and loan modification scam cases the Commission has brought since April to fourteen. In the four new lawsuits, defendants are charged with:

• Making false claims that they would obtain a home loan modification
• Making claims that, in conjunction with the loan modification, they would stop foreclosure proceedings
• Failing to honor promises of refunds to homeowners if the proposed action was not successful

The defendants are charged with doing little or nothing to advance the loan modification process for their clients after receiving fees approximately equal to one month’s mortgage payment.

The specific charges against defendants are as follows:

• U.S. Foreclosure Relief made false claims of fast turnarounds for approvals and years of experience with fictitious success rates for their loan modifications. Homeowners received neither. They are also charged with violating the FTC’s Do Not Call Rule due to their repeated contacts with homeowners on the National Do Not Call Registry. Pending a court date, assets of U.S. Foreclosure Relief were frozen.
• Lucas Law Center made false representations about their capability to obtain loan modifications. They also told homeowners to divert their mortgage payments toward paying Lucas’ fees, a violation of the law. The company did provide refunds to some of their clients but only after repeated complaints and requests for help from the Better Business Bureau, the California Attorney General, the State Bar of California, and/or local authorities. The court froze Lucas Law Center’s assets ahead of a court hearing
• Loss Mitigation Services assured homeowners that their loan modifications were virtually assured because they were a department of, or affiliated with, the consumer’s lender or mortgage servicer, a complete fabrication. Some homeowners lost their homes while waiting for modifications which would never happens.

1. ·         Apply2Save made claims that they could get loan modifications done in thirty to ninety days when, in fact, they never made contact with the homeowners’ lenders. To stall for time, Apply2Save told their customers that paperwork was lost, often more than once.

Operation Loan Lies follows an April 6, 2009, announcement by FTC Chairman Leibowitz, Attorney General Eric Holder, Treasury Secretary Timothy Geithner, Housing and Urban Development Secretary Shaun Donovan, and Illinois Attorney General Lisa Madigan that there would be a crack-down on companies that were set up to defraud homeowners seeking home loan modifications.

The four companies provide valuable lessons in how homeowners can protect themselves from hiring a deceptive company that will not deliver on promises. In the case of U.S. Foreclosure Relief, one warning sign would any talk or intimation of affiliation with the U.S. government. U.S. Foreclosure Relief and Apply2Save both pitched themselves as being able to get approvals for home loan modifications faster than any of their competitors. Homeowners should be aware that the process of modification is two sided and that lenders are currently flooded with applications. Any promises of fast turnarounds should be met with great skepticism. Lucas Law Center advised customers to pay them instead of their lender, an obvious warning about their regard for legal and ethical standards. Finally, Loss Mitigation Services’ claims of affiliation with lenders and guarantees of loan modification approvals because of it were definite red flags. Finding the truth would have been as easy as making a direct call to the lender to verify the claims.

Avoiding the problems encountered by homeowners that were scammed by these firms is as simple as asking the right questions, doing some leg work, and realizing that if it sounds too good to be true, it probably is. Insist on working with a firm that has already done hundreds of loan modifications and can prove it. Visit the office and ask questions until you’re comfortable. A loan modification is a huge and important undertaking. Ensuring its chances of success by doing your homework will keep you out of trouble and give you a much better chance at staying in your home.

About the Author:

Loan Modification Help Center is a free gathering place for resources and information on the rapidly evolving field of loan modification. To learn more about mortgage loan modification and view loan modification companies reviews visit loanmodificationhelpcenter.org

Article Source: ArticlesBase.com - Operation Loan Lies Nabs Four - Loan Modification Help Center

Loss Mitigation Prevention Miami

This is definitely one of the big banks and lenders best kept secrets.  But with the recent increase in foreclosures and the tightening of lender guidelines, which makes it even harder to qualify in today’s market for a refinance, and not to mention the drop in property values in such areas as Fort Lauderdale and Miami has brought the short refinance to the front lines.  While some might have heard the term Short Sale – which is the process you would go thru if you are trying to sell but you owe more than the house is worth.  Now the Short Refinance – is the process you would go thru if you want to keep you home, but you need a better loan program that will be more affordable and you owe more than your house is worth so you can’t do a regular refinance.  Similar to the short sale, the short refinance is a negotiation with your current lender to reduce the amount you owe to facilitate a refinance with a new lender.  Not to be confused with a loan modification.  With a loan modification you will stay with your current lender and just renegotiate the terms of you loan, with the short refinance you are getting the lender to reduce the pay off, so you can get a loan with a completely new lender.

 

Now with any loss mitigation process, including loan modification, short sale, and short refinance, they are all on a case by case basis and the lender has the final say.  So don’t expect to get the same results as your neighbor or family member received.  Any company out there that offers you a guarantee that you will be approved for any of these loss mitigation options or tell you to stop making payment, you should stay clear of……and I mean run.

 

Now it is important to note, that you don’t have to be behind on payments or in Foreclosure to qualify for a short refinance, although majority of the people that get approved are normally in foreclosure.  Today, with lenders having an abundance of non performing loans on their books has caused them to be more flexible when working with home owners to come to win win agreement for both borrower and lenders.

 

Also South Florida home owners in such areas as Fort Lauderdale and Miami that have found themselves with either an adjustable rate mortgage or have found themselves upside down on their homes, which has prevented them from doing a regular refinance, now have this option, that if approved, can refinance into a more affordable fixed rate mortgage and avoid foreclosure

 

Because of the increase demand for loss mitigation, it has been taking most lenders a minimum of 45 days and up to 90 days to complete the process.  Normally when a homeowner finds themselves in foreclosure, they would only hear about 2 options either file bankruptcy or try and sell.

 

Lately, loan modifications have become more popular, but that still doesn’t mean that is best solution for most homeowners. Here’s why, we offer the lender a short-refinance offer first and if for any reason it is not successful, then we will proceed with an offer to negotiate a loan modification for the client.

A short-refinance can basically create equity in a property, as we are getting the amounted owed to the lender reduced. It reduces the mortgage to the current market value, while eliminating the upside-down loan.   While A loan modification can keep the homeowner’s interest rate down to a comfortable level and put them into a fixed rate loan, while also placing any arrearages back into the loan.

 

But if the property is upside-down and by the adding the arrearages back into the loan, it could be in worse shape than before. Now don’t get me wrong, if the homeowner’s intentions are to keep the property long enough for the market to turn around, then this is a win win situation for both lender and homeowner. The main purpose of a short-refinance or a loan modification is that the home owner is allowed to stay in their home. A lot of Fort Lauderdale and Miami homeowners are realizing that their property is not worth nearly what they owe on it, several of them have opted to just walk away. A short-refinance gives homeowners’ hope, that they can get themselves from an upside-down mortgage problem,  and in some cases can save their home from foreclosure. This keeps them in their home, gives them a peace of mind, and allows them to get on with their lives as the possibility of foreclosure in now behind them.

While Loss Mitigation may not be for everyone, it is important to work with an expert in the field that can analyze your situation and help you determine the best loss mitigation for you and your family.

 

 

 

 

About the Author:

Marlon Baugh is a nationally-known mortgage expert. Since 2003, he has specialized in mortgage loans for people with Bankruptcies, Foreclosure or with other credit issues, as well as Loss Mitigation and Commercial Mortgages. If you would like a Free Copy or to get instant access to the remainder of this Insider Mortgage Report, please visit
http://www.specializedfinancialsolutions.com/foreclosure.htm or Call 954-678-5796

Article Source: ArticlesBase.com - In Foreclosure and Want to Keep Your Home? Try a Short Refinance…