Get the recipe of your success

MORTGAGE


Turn Your Light
Business On!

Click here

American Mortgage Relief Services on WordPress.com

LOAN MODIFICATION UPDATE

To be, or not to be (Late on your Mortgage Payment)

Over the last 12 months most of the clients that have contacted us regarding loan modification have either been late on their mortgage payments or have had truly heartbreaking hardships.

Recently that has changed and more often than not, we are being contacted by homeowners that are not late on their mortgage, still have solid income, yet find themselves in a position with an ARM that will eventually adjust and are finding it increasingly difficult to refinance and are becoming worried.

To be clear, if youarelate on your payments or if you have a serious hardship you need to contact me as soon as possible to review your rights and your options. You do not have time to wait until it is too late.

And if you have not been late on your mortgage and you are interested in your rights and loan modification options: read on.

This email goes over recent lender changes in regards to Loan Modification as well as valuable information for anyone considering Loan Modification (whether you have been late on your mortgage or not).

1)     To be, or not to be (Late on your Mortgage)

2)     Forensic Loan Review

3)     FHA Short Refinance

4)     Lenders guidelines changing constantly

5)     Importance of professional negotiation assistance

To be, or not to be (Late on your Mortgage)

Once again for anyone that has been late or has a heartbreaking hardship please contact me immediately. There is no time to wait and your lender will not help you if you are not aware of your rights.

I was recently contacted by a friend of one of my clients that had been late on her mortgage for months due to a series of heartbreaking hardships.

Her husband had a stroke, she fought and overcame cancer and her mortgage business and income was basically devastated. Having years of experience as a mortgage professional she attempted to work with her lender (EMC) directly and was constantly given the run around and bullied. After getting nowhere, she finally signed a “cash for keys” contract with her bank and was foreclosed on. The sad thing about this case was the fact that if she had contacted us a few weeks earlier we could have saved her home (which was her ultimate goal).

The reason I bring up this story is to motivate anyone who is in real trouble to contact me immediately.

In the example above the homeowner was late on her mortgage and had a true hardship.

What about the thousands of homeowners that have not been late on their mortgages and do not have a medical or heartbreaking hardship but have found themselves in a position where they have an ARM that will eventually adjust, or that have a loan (fixed or adjustable) that due to Jumbo, Stated or strict lending guideline changes have found themselves in a position where they cannot refinance.
Isn’t that a hardship?

I would say that 90% of my clients are in this position.

The average American Homeowner refinanced every 3 – 4 years in the United States. Based on this knowledge many homeowners were able to choose shorter term or interest only loans to save thousands of dollars in interest payments. But no one that chose a shorter term loan would have done so if they knew that by the time their loans would adjust they would not qualify for a new loan!

In 2004 Federal Reserve Chairman Alan Greenspan said that Americans’ preference for long-term, fixed-rate mortgages means many are paying more than necessary for their homes and suggested consumers would benefit if lenders offered more alternatives.

He said a Fed study suggested many homeowners could have saved tens of thousands of dollars in the last decade if they had ARMs.

“American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgage,” Greenspan said.

Obviously this is just a portion of what he said but it is the same sentiment that caused so many homeowners to choose shorter term alternative loans to save money.

But no one would have done this had they been told that in 2007 and 2008 they would no longer qualify to refinance their money saving ARM loans.

So what about homeowners that have not been late on their mortgage but do not qualify for a refinance? Do we qualify for Loan Modification?

To be, or not to be late on your mortgage: that appears to be the question.

Let me start off by saying that lenders are looking at and working with homeowners that are late on their mortgage first in line.

It really comes down to common sense.

Lenders are not modifying loans out of the goodness of their hearts or because they feel sorry for us.

They are choosing to modify loans to limit the lenders financial losses.

So if someone has been late on their mortgage it is obvious that there is a problem (and for homeowners that have not been late it is less obvious that there is a problem and it may require professional negotiators to get the lender to modify the loan).

So to be clear, those that are late on their mortgage go to the front of the line when it comes to loan modification but that is far from the end of the story.

One of the best loan modification results we have seen was for a Countrywide Neg Am loan for a client that had never been late. After negotiating, Countrywide offered a 2% 40 year fixed rate loan.

So this begs the question “do I have to be late on my mortgage before my lender will work with me”?

Here is some clear cut information:

1)      People that are late on their mortgage go to the front of the line for loan modification

2)      If you call your lender on your own and you have not been late on your mortgage 9 times out of 10 they will not even talk to you.

3)      For homeowners that have been using their savings or credit cards to make their mortgage payments they may be hurting their chances for a loan modification because they are not allowing the lender to see that there is a real problem (simply because they have not yet been late yet).

4)      Homeowners that have done everything they possibly (to avoid late mortgage payments) need to contact professional assistance and decide if depleting savings to avoid a mortgage payment is really the best option.

5)      Being late on your mortgage payment does affect your credit score but most importantly it makes refinancing difficult. For homeowners that do not qualify for a refinance anyways and that are using savings or credit cards to make mortgage payments, deciding to have a late mortgage payment may be a useful tool in getting the lenders attention and will ultimately help the loan modification process.

6)      If you work with professional negotiators you do not need to be late to get your lenders attention and qualify for a loan modification.

7)      For homeowners that have not been late on their mortgage, and that do not want to go late on their mortgage to get their lenders attention and do not have a heartbreaking hardship other than the fact that they no longer qualify for a refinance (there are powerful options available).

Forensic Loan Review

Homeowners who are having difficulty getting the attention of their lenders might want to obtain a forensic loan review to determine if their lenders made any mistakes when the mortgage was issued.

Even a minor $30 miscalculation on the lender’s part could be an actionable offense, and the threat of a lawsuit is often enough to persuade the lender to deal with you in trying to find a way to help you work through your financial difficulties.

In a forensic loan review, a legal pathologist scours your loan documents looking for errors in, among other things, the truth in-lending (TIL) statement the lender provided shortly after you applied for your mortgage and the lender’s annual-percentage-rate (APR) calculation so you could compare loan costs.

If the TIL statement doesn’t match up with the HUD-1 closing-cost sheet you received at closing, if the APR is off by just a hair, you might have cause for legal action against the lender.

Typically, forensic loan audits are ordered by mortgage investors to determine what kind of legal liability confronts them in the pools of loans they already own or are considering buying. As a so-called “business-to-business service,” they are not generally available to individual borrowers.

That is until recently.

American Mortgage Relief Services is now offering comprehensive loan document reviews to homeowners as part of its service to help homeowners get the attention of their lenders and ultimately achieve powerful loan modification results.

If an error is found, it can force the lender to move you up to the front of the long, long line of borrowers who are looking for loan modification.

In some cases, if people were simply overcharged by $30 on the final HUD-1, or if the APR was higher by just .125 percent than was originally disclosed, this may give the lawyers leverage when negotiating with the lender to grant a beneficial loan modification.

This is an excellent option for homeowners that have Negative Amortization or Pick a Pay loans.

The TIL (truth in lending) statement for Neg Am loans are notorious for having mistakes.

Because Neg Am loans have 2 interest rates (the minimum payment rate and the fully amortized rate) the APR is very difficult to calculate and there is bound to be mistakes on the paperwork.
Intentional or not these mistakes give negotiators the leverage to force lenders to modify the loan.

Countrywide was one of the largest lenders and buyers of Neg Am loans in the United States.

Over the last 3 months Countrywide has changed their loan modification guidelines 3 times (regarding whether they will work with homeowners that have been or have not been late on their mortgages).

For many homeowners that have Countrywide loans and have not been late, a Forensic Loan Review can be essential in obtaining a successful loan modification.

If you have any questions about your current loan or if you would like to know if a Forensic Loan Review would benefit you or a loved one please call or email me immediately.

You can also fill out the Evaluation Form attached in this email and fax it back to me.

FHA Short Refinance

Another powerful option for homeowners that have not been late on their mortgage but are interested in a loan modification or principle reduction is the new FHA Short Refinance.

Many homeowners still have good income, and have not been late on their mortgage or credit cards but cannot refinance because the value of their home has dropped in recent months.

For these individuals there is a powerful option that went into effect this month called the FHA Short Refinance.

An FHA Short Refinance is an actual refinance for people that qualify for the FHA guidelines and simply cannot refinance because the value of their home has dropped.

Thanks to the Housing Rescue Bill that went into effect this month, homeowners that qualify will be able to get a new fixed rate FHA mortgage and have their the principle of the mortgage balance reduced to 90% of a conservative appraised value of the home.

The bill requires lenders to make major concessions including writing down the value of the loan balance. 

As part of the deal, the old lender writes off any fees and penalties on the original mortgage, including prepayment penalties, and accepts the proceeds from the new loan on a paid-in-full basis.
In areas where prices have plummeted by as much as 20%, that will mean a substantial loss for the lender and will help homeowners significantly.

Loan modification and FHA short refinances do not negatively impact borrowers credit scores.

To see if you qualify for an FHA Short Refinance please call or email me or you can fill out the Evaluation Form attached in this email and fax it back to me for review.

Importance of Professional Negotiation Assistance

This is one of the most incredible times in banking and lending history. Loan Modification has always existed, yet over the last 30 years it was usually not in the banks best interest to modify a loan rather than foreclose. Only recently with the advent of 100% financing and relaxed lending guidelines have banks been put in a position that many homeowners owe more than their homes are worth.

For the first time ever on a nationwide scale, foreclosures will cost lenders more money than simply modifying the loans and taking a loss on the amount of interest or principle balance.

If we had been told 2 years ago that we could get an easy low doc loan and either buy a home with zero down or refinance and cash out to 100% of the over inflated value of our homes and in 2 years qualify for a loan modification or an FHA short refinance and have our interest rate reduced to below the going rate and even have the principle balance of our loans reduced we would not have believed it.

But that is exactly what is happening for homeowners that qualify.

I do not think that by asking for a loan modification or an FHA Short Refinance we are taking advantage of the lenders. Remember these are the same lenders that would raise the interest rates on our credit cards to 22% if we miss a payment or freeze our Home Equity Lines of Credit and Small Business Lines of Credit without warning.

It is my firm belief that everyone that has a mortgage in the United States should see if they qualify for a loan modification or short refinance.

Loan modifications, FHA short refinances and short sales all require that we negotiate with the lender.

The lender will not grant an FHA short refinance a Short Sale or a Loan Modification unless you negotiate and present your case without a shadow of a doubt. As with any negotiations the final outcome and results are determined by knowledge and experience of the negotiator. One important factor stands alone in determining the best results and that is Professional Negotiation Assistance.

There is a complex set of procedures, negotiations, and documentation that needs to be completed. In most states this process needs to be performed by an attorney or properly licensed counselor.

The key to borrower success is navigating the red tape and unfamiliar internal processes at banks and lenders and knowing when to be aggressive and when to take the offer and this is why working with professional loan modification experts is extremely important.

Even more frustrating and challenging is the fact that the lender that services our loans may not be the ultimate investor that owns the note. The loan

modification guidelines for the company that services your loan may be dramatically different from the company that owns the note. In addition to this the loan modification guidelines are changing monthly and vary from bank to bank. Countrywide has changed their guidelines on late mortgage payments 3 times in as many months. Countrywide even told one of my clients that what may work with Countrywide last month won’t always work this month. This is exactly why homeowners need professional assistance to obtain the best results possible.

If you would like to know if your current mortgage and financial situation qualifies for loan modification or FHA short refinance simply fill out the Evaluation Form attached in this email and fax it back to me.

You can also go towww.AmericanMortgageReliefServices.org for more information.

I hope you are having a great week.

I wanted to share a very interesting and controversial article with you.

One of our clients emailed this to me and I thought you might be interested in it.
I shared this article with several of my friends and clients earlier this week and I got a lot of mixed reactions.

Below I have included the article and reaction to the article along with additional information about Loan Modification, FHA Short Refinance, Short Sales and recent Lender Guideline Changes.

Please take your time reviewing this information and please call or email us if you have any questions or concerns.
We am looking forward to speaking with you soon.

Just stop paying your mortgage?

By Peter Schiff

San Diego Union Tribune
October 10, 2008

If you are a mortgage holder who is either struggling with crushing payments, bitter for having overpaid for your home during the bubble, or who has extravagantly refinanced when prices were rising, the government’s landmark $700 billion bailout package has an important message for you: stop making your mortgage payments . . . immediately. Furthermore, if you believe that with some planning and sacrifice you may be able to meet your mortgage obligations, the government’s message is clear: relax, don’t bother.

While angry voters have labeled the package as a bailout for Wall Street, it is more akin to a “Get out of Jail Free” card for anyone who acted irresponsibly during the boom. Here’s why.

Nobody likes foreclosure, least of all politicians. The new law clearly indicates that the government will make major efforts to reduce foreclosures through “term extensions, rate reductions and principal write-downs” of the troubled mortgages that it buys from the private sector. In other words, your new landlord will bend over backward to keep you in your home. The legislation telegraphs this by including a provision that extends until 2013 the exclusion of loan reductions from taxable income.

When a financial institution holds a mortgage, homeowners must live with the fear of foreclosure. Private institutions only have obligations to shareholders. In the case of a defaulting borrower, they will look to recover as much of their principal as possible. If foreclosure is their best option, they will take it in a heartbeat.

The government has no such obligations. Its only goal is to keep voters happy. After supposedly bailing out the fat cats on Wall Street, no politician wants to be accused of evicting struggling families. Once you understand this, all of your anxiety should melt away. Why pay your mortgage if foreclosure is off the table, and if you know that lower payments, and possibly a reduced loan amount, would result? A tarnished a credit rating is a small price to pay for such a benefit.

Unfortunately, this boon will not extend to those individuals who either made large down payments or resisted the temptation of cashing out equity. The large amount of home equity built up by these homeowners, means that in the case of default foreclosure remains a financially attractive option. As a result, these loans will be much less likely to be turned over to the government.

If your mortgage does become the property of Uncle Sam, the growingly popular impulse to “just walk away” should be replaced by “just stay and stop paying.” No one will throw you out. After a few months, or years, of living payment free, you will get a call from a motivated government agent eager to adjust your loan into something affordable.

To bolster your bargaining position it will help to be able to claim poverty. As a result, if you have any savings, spend it soon, before they call. Buy a bigger TV, a new wardrobe, or better yet, take a vacation. After the hardship of spending all of your refi cash, you probably deserve it. If you have any guilt just remember, Washington argues that consumer spending is the best way to stimulate the economy. Living beyond your means is a patriotic duty.

If you do get the opportunity to live for a while with no mortgage payment, don’t make the tragic mistake of using your extra cash to pay down your credit cards. As the growing level of credit card defaults will soon push credit card companies into bankruptcy, we can expect a similar bailout plan for American Express and Discover Financial. When that happens, expect massive balance reductions for Americans who can demonstrate the inability to pay. The bigger your balance, the greater the benefit.

Taxpayers, however, will not be so lucky. The savvy investment strategists who see the government turning a tidy profit on its mortgage purchases have not factored in the incentives that will discourage nonpayment. The only way the government will be able to profit would be to buy the mortgages at deep discounts to actual loan values. However, if the purchase prices are too low, the plan will bankrupt the institutions it is trying to bail out. On the other hand, if it substantially overpays, which seems far more likely, it will bankrupt the nation.

In any event, as more and more borrowers succumb to the allure and safety of nonpayment, look for the number of troubled assets to swell. This will ensure that the $700 billion merely represents the first installment in what will be a multitrillion-dollar plan. Just as government policies provided the primary impetus in blowing up the housing bubble earlier in the decade, its latest attempt at market manipulation will only result in making a terrible problem far worse.

This is a very interesting article because it digs into the current issues facing us today but the author is obviously taking things a little bit too far to make a point.

The article brings up a good point that being late on a mortgage payment is not the end of the world.

It also points out that the government’s involvement in the mortgage crisis coupled with the high costs of foreclosures to the lenders is forcing lenders to seek alternatives to foreclosure for homeowners that seek assistance to negotiate with the lenders and propose a favorable alternative other than foreclosure (whether they are late on their mortgage or not).

It is clear that being late on our mortgages will get the attention of the lenders but it is not the only way.
Being late on our mortgages may eliminate the option of an FHA short refinance (principle reduction).

It also can damage our credit score.

In contrast to what the author of the article is saying, we do not want to claim poverty or spend all of our savings, because we still have to be able to afford the new loan we are asking the lender for (through a loan modification).

Ultimately just because we are late on our mortgage (as many of us have already learned) it does not mean that the lender will negotiate with us directly and if they do, it doesn’t mean that they will offer us the best terms we deserve or qualify for unless we have the support of professional and experienced loss mitigation negotiators.

And it definitely does not mean that someone from the Government will call us directly to modify our loans if we are late on our mortgages.

It is clear however that being late on a mortgage for homeowners with real hardships will assist in the loan modification negotiations and should not be over looked as an option for those in real need.

But what about homeowners that are not late and whose major hardship is the fact that they have an ARM that has or will adjust and whose home value has dropped?

For homeowners that fit this description an FHA Short Refinance is a powerful option.
Below is some detailed information about the FHA Short-Pay Refinance.

What is an FHA Short-Pay Refi?

Where as a “Short Sale” has become a well known solution for borrowers to avoid foreclosure by selling their home for less than what is owed, the “FHA Short Payoff Refinance” (Short-Pay Refi) is becoming a popular tool for borrowers to retain their home.

This process is similar to a short sale but, instead of the property being sold, it is refinanced with a new FHA backed lender.  A Short-Pay Refi is unique in that it allows the borrowers to keep their home, lower their payments and eliminate the upside down equity in their homes while reducing their principal.  

The transaction itself is a basically a three part process. 

  1. First we need to establish the actual current conservative value of the home with an appraiser.
  1. Next, we document and underwrite the homeowner’s income for the new appraised value and issue an approval. 
  1. Now, armed with that approval, we can enter into equity re-negotiations with the bank/loan servicer of the homeowner’s loan to negotiate a principle reduction on the current mortgage. 

Once the bank/loan servicer accepts the offer presented, we can complete the new FHA loan transaction and principle reduction .

In areas where values have dropped 20% or more, this could mean a substantial reduction in principle and loss to the lender.

It is still a win win for the homeowner and the lender (who gets to remove the bad loan from their books and move forward making new loans.

Who should get an FHA Short-Pay Refi?

For those borrowers that still have decent credit, ficos, income and no mortgage lates but through either upcoming changes to their interest rate (making it no longer affordable) or to a decline in the value of their home (owing more than it’s worth), a Short-Pay Refi is the perfect solution.

Through the FHA Short Refi, the borrower will qualify to refinance into a low fixed rate FHA loan at the highest LTV’s (loan to value ratio) possible.

This allows the borrowers to put the brakes on before everything gets away from them and spins out of control.

Why would the bank/loan servicer agree to a Short-Pay Refi and not just foreclose on the property? 

Simply put, foreclosing on a property requires large amounts of legal fees and then the home is typically sold at a substantial discount off of the fair market value.  The Short-Pay Refi allows the loan servicer to avoid the majority of the legal fees and let’s the new lender make its largest loan based on the fair market value.  When a Loan Modification can’t solve the problem as many loan servicers are not lenders, a Short-Pay Refi becomes a very powerful alternative.

To sum it up.

In essence, with a Short Payoff Refinance, the bank/loan servicers are happy because the loan is off their books and the homeowners are happy because they get a fresh start while still staying in their home with a lower mortgage payment and a lower mortgage balance.

It needs to be noted that FHA Short Refinances, Short Sales as well as Loan Modifications, all require that we negotiate with the lender.

The lender will not grant a Loan Modification, an FHA short refinance or a Short Sale unless we negotiate and present a convincing case to the lender that this alternative will cost the lender less than a foreclosure. As with any negotiations the final outcome and optimal results are determined by the knowledge, experience and tools at the disposal of the negotiator.

Forensic Loan Review gives needed leverage in Lender Negotiations (for Loan Modification, FHA Short Refi and Short Sales).

Many lenders are dragging their feet and trying to avoid negotiating with many homeowners in need and putting them off and choosing to work with only people that are just about to foreclose (and will cause the greatest and most immediate cost to the lender).

It is becoming apparent that a Forensic Loan Review may be a necessary tool in getting the lender to negotiate with us for a Loan Modification, an FHA Short Refinance or a Short Sale (all of which require calculated negotiations with the lender) whether a client is late on their mortgage or not.

Even a minor $30 miscalculation on the lender’s part could be an actionable offense, and the threat of a lawsuit is often enough to persuade the lender to deal with you in trying to find a way to help you work through your financial difficulties.

In a forensic loan review, a legal pathologist scours your loan documents looking for errors in, among other things, the truth in-lending (TIL) statement the lender provided shortly after you applied for your mortgage and the lender’s annual-percentage-rate (APR) calculation so you could compare loan costs.

If the TIL statement doesn’t match up with the HUD-1 closing-cost sheet you received at closing, if the APR is off by just a hair, you might have cause for legal action against the lender.

If an error is found, it can force the lender to move you up to the front of the long, long line of borrowers who are looking for loan modification.

In some cases, if people were simply overcharged by $30 on the final HUD-1, or if the APR was higher by just .125 percent than was originally disclosed, this may give the lawyers leverage when negotiating with the lender to grant a beneficial loan modification, short refinance or short sale.

Conclusion 

Although it may seem unfair, it is clear that one of the best ways to get the attention of the lender and to assist the negotiations for a Loan Modification is being late on our mortgages. For those of us that are using our savings or credit cards to make our mortgage payments, allowing our mortgages to be late has to be a real consideration as it undoubtedly will assist in a Loan Modification.

For those of us that have not been late, still have decent credit scores yet still find ourselves owing more than the home is worth, an FHA Short Refinance is a powerful option.

In the end, whether a homeowner decides that a Loan Modification, a Short Refinance or a Short Sale is the best option, negotiating with the lender will be necessary.

It also appears clear that a Forensic Loan Review will give the lawyers needed leverage when negotiating with the lender to grant a beneficial loan modification, short refinance or short sale.

If you would like to know if your current mortgage and financial situation qualifies for loan modification or FHA short refinance simply fill out the Evaluation Form attached in this email and fax it back to me.

You can also go to www.AmericanMortgageReliefServices.org  for more information.


Category: American mortgage

Similar articles: