Upside Down Mortgage

Posts Tagged ‘mitigation’

Loss Mitigation Short Sales

Question: Confused about selling a home for less than our mortgage amount?

We owe $35M on a rental property that we purchased for $40M a few years ago. The area in which the property is located has gone down the toilet for the past few years and the home is now worth around $15-$17M. We received an offer of $15M for the home and we need to take it. We can't keep a tenant in the property any longer because of the crime rate. The property has been robbed/vandalized 3 times already. We contacted our mortgage company to see if we could pay them the $15M from the closing, but then get an unsecured loan from them to continue paying the balance. The immediately sent us to the loss mitigations dept and started talking short sale. I didn't even know what that meant until I googled it online. If we were not asking them to write off/forgive the balance, why are they talking short sale? If they can't lend us the balance, unsecured, why didn't they just say so and hope that we could get an unsecured loan elsewhere? I'm so confused...

Answer: For them to approve a relase of the lien and to convert the loan from a secured mortgage to an unsecured note they'll need to get an approval. It is a short payoff to release the lien, even if you are paying off the remainder, so the loss mitigation department is the logical department to handle it.

Most short sales they do forgive the remainder but on some they take a note, and you fall into the latter group. Just cooperate with them and you'll be fine.

Good luck.

Loss Mitigation and Short Sale Secrets

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Loss Mitigation Wells Fargo Mortgage

If The Obama administration can't coax mortgage providers in California into action, perhaps they can shame them. While pushing forward the Mortgage Modification program designed to help millions of American citizens avoid foreclosure, they have been naming the worst banks to try to shame them into changing their policies.

Banks usually realize that it is in their best interests to help homeowners make the necessary loan modifications, because foreclosures are costly for them as well- if they're not being myopic, they'll realize that a healthy housing industry will result in more profits for them. But getting a mortgage lender to reduce interest and be reasonable with loan mods is easier said than done.

But according to the government, the leader is Saxon Mortgage Services (a subsidiary of Morgan Stanley), and JPMorgan Chase and Citigroup are also showing willingness to cooperate with the administrations goals and help homeowners out.

The worst of the bunch? Wells Fargo, and Bank of America, with around only five percent of its loansin trial modifications. The White House has responded to this poor showing with their "Mortgage Plan", a requirement that all borrowers go through a three month trial period to prove they can make payments on time before they get caught up in the full-fledged loan. If the goal is met, the borrow gets a cash incentive that reduces the amount of principle they must pay in the future. And there are even more incentives involved in the Mortgage Plan: three thousand dollars off the principle for every year that payments are perfectly paid.

But it's an uphill battle. Banks are often not equipped to provide loan modifications on the fly because it's a fairly new concept and is often just not profitable. In the old days, banks existed only to lend, collect, and process mortgage payments. They would be engaged in many kinds of investments, but the retail sector was their tried and true method of garnering profit. It was up to separate debt relief companies to provide services for helping homeowners consolidate their debt or mitigate their losses. Many banks find it difficult to set up loan modification systems: they have train staff, make new decisions, set protocols and guidelines, engage in a new kind of management that may be utterly foreign to them. Big banks are usually pretty uneasy with such a high volume of sudden change.

And secondly, banks make decisions based on profits. They only want to take actions that will benefit their profit margin, and loan modification doesn't always fall under that category. Encouraging banks into making decisions that will result in cash loss is no mean feat. Perhaps that is why shaming them into it seems to be working better.

So from the perspective of the homeowner, these policies are a good thing. However, if you own a bank, you may be less than pleased.

About the Author:

For more information on California Loan Modifications and short sales, visit http://wwww.accesslossmitigation.com" target="_blank">www.accesslossmitigation.com">http://wwww.accesslossmitigation.com

Source - California Loan Modification Reform

First American Homesavers Loan Modification Introduction

Loss Mitigation Processing

Question: Loss Mitigation and Short Sales?

It seems to me that the only difference between gathering information for Loss Mitigation and a Short Sale is the sale and purchase contract (Short Sale). Basically the rest of the information to process the 2 are the same. Is this true?

Answer: You are correct. You are re-qualifying the homeowner as if you were turning back the clock. Did they lie on the original application. Do they have more assets than they are claiming. Are they willing to share the loss..

Short Sale - Part 4: Real Estate Foreclosure Prevention - Mortgage Bailout Process - Negotiate Free