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Loan Modification Steps

Question: Mortgage Question......?

When I bought my condo 4 years ago here in CA it was at a reasonable price compared to what houses were going for. I got an interest only loan fixed for 5 years figuring I'd be able to sell it and get a home after about 3 years. What I'm paying a month now is absolutely ridiculous but I don't want to walk on the place. I need to buy a home as the family has grown and need some advice. What are the steps to modification? I'm current on all payments, never made a late payment. My loan is set to adjust in 2011. Any advice?
Just an added note, I am upside down in the loan meaning that I owe more than it's worth. I don't think I have any equity in it, so how do I do a refi?

Answer: look up www.naca.com. They may be able to help you refinance your home. They are a not for profit program that helps people get out of bad situations like yours. I know they are in California. Good luck. By the way, they are non-profit and understaffed, so you will have to be well organized and help them stay on top of things. It is worth it. I am sure it is one of your best options.

Contact NACA, they can sometimes do negotiations with your lender to help you if you are upside down. It is worth looking into. Go to the workshop for refinancing and they will teach you what to do.

From their website....

All of the below solutions provide for an affordable mortgage payment over the long-term. In fact the Restructuring sometimes lowers the fixed interest rate to less than a NACA Refinance. As opposed to the refinance, a Restructure is available throughout the country and is not based on factors such as equity, debt ratios and credit score. NACA through its Mortgage Consultants and Home Save Department will make a determination of the solution that is most appropriate for your particular situation.

Affordability Budget:
NACA’s Home Save Program provides four long-term solutions. The NACA process considers the individual characteristics for each homeowner but provides a framework and standardization to provide for the most effective long-term solution. The Affordable Budget provides an analysis of your current financial situation. If completed accurately and completely, it will show the mortgage amount you can afford. The solutions are based on what you can afford based on a tight budget consisting of the following:

Net Income:
Less:

Required Liability Payments

Required Monthly Expenses

Allowance for Non-Recurring Expenses (usually $200)
Net Available Income for a Mortgage Payment (i.e. Principal, Interest, Taxes and Insurance)

Options:
NACA’s home save options are based on what you can afford based on our comprehensive Affordability Budget. They are provided in the order that is most appropriate for your situation. The most viable and appropriate solution for most homeowners is the Restructure. Servicers and investors are now more willing to restructure a loan given the collapse of the mortgage market and the significant loss they would incur with a foreclosure.

PAYMENT PLAN (i.e. forbearance agreement):
A Payment Plan is an arrangement with the servicer for you to become current within a twelve month period. This is appropriate if your interest rate is reasonable and your mortgage payment is affordable. Payment Plans are effective when life’s circumstance (i.e. illness, short-term job loss, or personal issues) have created a short term financial setback. The past due amount is spread as an additional payment over a number of months and on completion you would be current. While Lenders/Servicers often advocate for this, it will not prevent an eventual foreclosure if your existing mortgage payment is unaffordable or will become unaffordable.

MODIFICATION:
A Modification of a loan is where the past due amounts are added into the remaining balance or made payable upon loan payoff (i.e. refinance or selling of the house) This works if you have an affordable payment but have experienced a long-term financial set back and cannot become current in 12 months. The monthly payment does not decrease and often increases due to the higher loan amount (Interest rate reduction modifications are considered a Restructure Solution as described below).

RESTRUCTURE:
A Restructure requires either a reduced interest rate and/or reduction in the mortgage amount. This is the most powerful tool for many homeowners to save their home. NACA has been extremely successful in making dramatic reductions in interest rates saving homeowners hundreds and thousands of dollars a month in their mortgage payments. You would work with your NACA Mortgage Consultant to determine a mortgage payment you can afford based on the above described Affordability Budget. The monthly taxes and insurance are deducted from the available payment leaving the principal and interest payment. The NACA Restructure Solution locks in the principal and interest for the remaining term of the loan thus allowing you to achieve true homeownership. The NACA Restructure Solution requires that the mortgage payment reflects this affordable monthly payment. This can be accomplished by adjusting either or both the interest rate and outstanding mortgage amount. The Restructure is not conditioned on the three major limitations for refinances:
Equity in the home (i.e. loan-to-value)
Debt-to-income ratio
Payment History (i.e. credit score)

The mortgage payment for principal and interest is submitted to the servicer of your loan (the servicer may not be the original lender). The servicer would reduce either or both to achieve the mortgage payment over the remaining term of the loan. The servicers has certain authority to change the terms of your loan. They may need to get the investors approval for such a solution. If the investor rejects this solution, NACA may appeal the decision since your Affordability Budget documents the maximum amount you could afford for a mortgage payment. If the servicer and investor still refuse the Restructure Solution then NACA could work with you as part of the Homeowner Advocacy campaign as described below.

NACA REFINANCE:
The NACA Refinance provides an important option for homeowners to achieve an affordable long-term mortgage payment. The NACA Refinance is one product that is the best in America. It is at a below-market 30 year fixed rate interest (Currently at 4.875%), no points, no closing costs, and no fees. There are also NO abusive terms: No yield spread premium; No pre-payment penalty; No balloon payment; No required credit life, and No other unnecessary or overpriced insurance. NACA has committed One Billion dollars to help homeowners who have an unaffordable mortgage keep their homes in the wake of the mortgage crisis. This continues to be the most significant refinance option for homeowners at-risk of foreclosure in this mortgage crisis.

While the NACA Refinance is the best in America, there are eligibility criteria that are not limitations with a Restructure Solution. These include Loan-to-value, Debt-to-Income Ratio, Payment History, property located within a NACA service area, and other criteria. There would also be additional documentation of income, previous mortgages and other documentation requirements. All properties to be refinanced must have thorough inspections.

OTHER OPTIONS:
NACA does not consider selling your home or a deed-in-lieu to be viable solutions. If you are determined to keep your home and are willing to engage in the Homeowner Advocacy there is a good chance that you will not lose it. If selling or doing a deed-in-lieu is your desire, we may be able to assist and work with you to reestablish yourself to become a homeowner in the future with an affordable mortgage payment. To purchase another home would likely take a significant period of time.

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Loan Modification Negotiation

Here’s a list of loan modification do’s and don’ts to help you avoid common pitfalls.

Do know your rights.

More than 80% of mortgage contracts violate one or more lending laws—and most of them go unnoticed. But these violations can be your biggest weapon in the loan modification process. They can give you the leverage you need to negotiate with your lender and stop foreclosure. Your loan modification attorney can help you understand your rights and use them to get the results you want.

Don’t wait too long.

The foreclosure process is designed so that you have time to get back on your feet and save your home. But that doesn’t mean it’s safe to procrastinate. The longer you wait, the harder it gets to get you out of that fix. As soon as you decide you need mortgage help, call for a loan modification help and get started.

Do work with your lawyer.

Your Home Loan Modification doesn’t rest in the hands of your lender, your broker, or your loan modification attorney. These people can help, but you have to do your part and cooperate with your lawyer. Make sure to submit your paperwork on time, answer questions honestly, and give them a clear picture of your financial situation.

Don’t file for bankruptcy, unless you really have to.

Many people think that filing for bankruptcy can help them stop foreclosure. But data from the American Bar Association shows that it doesn’t work that way. In fact, 96% of the people who file bankruptcy end up losing their homes anyway—so they’re left with a foreclosure AND a bankruptcy on their records. In some cases, bankruptcy is still a viable option, but don’t make any decisions without getting professional advice.

Do have a backup plan.

Not all people will qualify for a mortgage loan modification. Maybe you’ve fallen too far behind, your lender may be simply hard to work with, or maybe you don’t need it after all. In any case, it’s always good to have a Plan B. Your mortgage modification attorney can help you find the best solution.

If you can’t get your loan modified, talk to your lawyer about a short sale. This involves selling your home for less than its fair market value and giving the proceeds to your lender. Although you still lose your home, it’s not as damaging to your credit as foreclosure, so it’s easier to get back on your feet.

About the Author:

The Loan Modification Firm has all the experience and knowledge that is needed to get the job done. The Loan Modification Attorney can be reached at Law Offices of Marc R. Tow Just Call 800-738-1170 or visit Home Loan Modification

For a Free consultation talk to our Loan Modification Lawyer or go through the Loan Modification FAQs

Article Source: ArticlesBase.com - 5 Tips Every Loan Modification Firm Talks About

Loan Modification Options to Save Your Home From Foreclosure

Mortgage Modification Hope

Question: Should I miss another payment on my mortgage to get a loan modification?

I was not able to make my November mortgage payment and now I am behind. I filled out loss mitigation paperwork in hopes that I can get a loan modification because our payments are too high. When I called the bank I was told by 1 of the representatives that if I want to get a loan mod that I would also need to miss Decembers payment. I am not sure if I should do this and if I do, when the bank calls and asks why I also missed December do I tell them the truth that their representative advised me to? Need some help here.

Answer: Be careful with these loan modifications.

I have heard that if the Bank writes off a percentage of the debt to modify your loan, that amount will be reported to the IRS, and you will have to include that amount as taxable income when you file your tax returns. Beware!

Mortgage Modification l Before You Checkout