Archive for the 'Loan Modification' Category
Top 10 Problems to Loan Modification…
May 5th, 2009 categories: Loan Modification
The biggest problem to the loan modification process is finding a live person who cares about you, your problem and wants to help you.
There are countless stories of people being put on hold for 30 minutes or more. Finally someone picks up the phone, you tell them the same information, and they transfer you again to some one else.
Following is a list of the top 10 problems you will have when trying to modify your loan:
1. They do not return calls.
2. They take 30-60 days to give a written answer
3. They require their own authorization to release information forms
4. They take too long to assign the cases
5. They keep changing officers after they assign cases
6. They give wrong information regarding your loan
7. You always have to refax your documents and explain what you just sent.
8. Customer service sends your call to the wrong department.
9. They hang up on you or you get disconnected.
10. They cannot make a decision.
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Loan Modification VS Pre-Payment Plan
May 5th, 2009 categories: Loan Modification
A loan modification is a written change to the agreement between the mortgage holder (or its Servicer) and the homeowner on the original terms of the note.
The goal of the loan modification is to prevent foreclosure by altering the original payments terms so that it becomes more affordable for the homeowner.
Loan modification programs may be short term or long term but the intention is to allow homeowners to keep up with payments which they can afford and prevent them from going into default.
There are many ways to modify the original loan.
- Reduce the interest rate
- Extend the loan term
- Reduce the principal balance
- Or a combination of the above
Using these various combination’s the Loan Modification will reduce the payment amount for the homeowner so it is more affordable.
A Loan Modification must not be confused with Pre-Payment Plan.
A pre-payment plan requires homeowners to make increased monthly payments to cure payments that are in 
arrears.
Most pre-payment plans fail because they increase the monthly payment rather than decrease the monthly payment.
Remember if your bank offers you a plan and it will take more money out of your pocket then this is a pre-payment plan that benefits the bank not the homeowner.
If the bank reduces your payment and puts more money in your pocket then this is a good loan modification plan.
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Illinois Foreclosure Law Needs Improvement..
May 4th, 2009 categories: Loan Modification, Real Estate Definitions
The February 2009 Report “Foreclosing a Dream” by National Consumer Law Center examines the current foreclosure laws in all 50 states and evaluates how well the laws in each state protect homeowners facing foreclosure.
This study recommended the following actions in order to restore fairness to homeowners in the foreclosure process before a foreclosure sale and after the sale:
1. A Judicial Foreclosure Process should be the norm where homeowners are given due process in the courts.
2 Homeowners must be served a Notice of Default
3. States should require a lender to make attempts to modify the loan before foreclosure can be initiated through a formal court proceeding.
4. Homeowners should be given the right to cure the default , catch up on missing payment , without penalty , before any formal foreclosure proceedings.
5. Guarantee the right to reinstate the mortgage by paying the all payments in arrears and any costs up to the time of a foreclosure sale.
6. Each State should create an Emergency Financial Assistance Fund for homeowners facing foreclosure.
7. All homeowners with the Right to Redeem the property after a foreclosure sale.
8. Prohibit Lenders from giving homeowners Deficiency Judgements after foreclosure
9. Accounting of all sales to be supervised by the courts
10. Require court supervision to surplus of any sale proceeds to homeowner
Illinois Foreclosure Law
| Pre-Foreclosure Protection | |
| Homeowner must be served Notice of Default | Yes |
| Homeowners right to Judicial Review | Yes |
| Homeowners Right to Loss Mitigation before Foreclosure | No |
| Homeowners Right to Cure before Sale | No |
| Homeowners Right to Reinstate before Sale | No |
| Housing Emergency Assistance Fund | No |
| Post Foreclosure Sale Protection | |
| Homeowner Right to Redeem Home After Foreclosure | No |
| Protection from Deficiency Judgement | No |
| Court Supervision of Sale Proceeds | Yes |
| Court Supervision of Surplus | Yes |
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The American Dream or the American Dilemma
May 2nd, 2009 categories: Loan Modification
The American Dream has always been to own a home. As homeowners try to find a way to keep their home out of foreclosure the American Dream has turned into the American Dilemma.
Homeowner who wish to keep their homes out of Foreclosure must decide which Loss Mitigation plan will work for them.
- Repayment Plan- allows the homeowner to get current by making regular mortgage payments plus the amount in arrears usually spread out over a period of less than six months.
- Forebearance Plan – is also a payment plan that may reduce or suspend the owner’s paymennts for a period generally no more than 12 months.
- Loan Modification- involves modifying the mortgage, such as by changing the interest rate or terms of the mortgage, capitalizing arrears by adding them to the mortgage, and reducing the principal balance of the mortgage.
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Staying A Float in Today’s Real Estate Market
April 3rd, 2009 categories: Loan Modification
Are you trying to stay a float on your mortgage? Most people are over their head in debt and are sinking fast and need a life support.
Most people who are struggling today want to keep their homes but do not understand what they need to do to nor do they know if this is the best plan for them.
We have all read about “Loan Modification Programs” but what people really want to know is will a Loan Modification Program help them?
Following are a list of questions you need to ask before talking with your lender about a Loan Modification Program.
What is Your Loan Balance?
How much do you owe on your home. Your monthly mortgage statement will show your loan balance each month. Your monthly payment is also there with the amount going to principal, interest, taxes, and insurance.
What do You Think Your Home is Worth?
Based on today’s real estate market what do you think your home is worth. The difference between what you owe and the current market value is your equity. You should have a minimum of 20% equity in your home to refinance your home or do a loan modification.
If you have no equity in your home or your home is worth less than what is owed you might be a candidate for a “Short Sale”.
Do You Have a Job?
This might be one of the most basic questions to ask. If you are employed and have a pay stub from your employer then look to see what your gross income is per year and divide this number by 12 months to determine your monthly gross income.
If you are currently not working then it is not possible to do a loan modification program.
Debt to Income Ratio’s
Do you find too much of your income goes toward your mortgage and you have less money each month for other living expenses. If you do then you are not alone.
Typically we should not be spending more than 31% of our monthly income on housing.
In order to figure this amount just take your monthly income and multiply by 31% and you will see how much you should be paying on a mortgage.
( Example: $50,000 annual salary divided by 12 months= $4,166 monthly gross income. $4,166 X .31%= $1,291.67 maximum mortgage payment per month)
If you are paying more than 31% on your mortgage then you need to find a more affordable home.
How is Your Credit ?
If you pay your bills on time then you should have good credit. FICA scores of 700+ are good credit scores and are required to modify your loan.
If you are having problems paying your bills on time this too will affect your credit and more than likely affect your ability to do a loan modification.
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