Archive for the ‘Loan Modification’ Category
We interrupt the regularly scheduled viewing of the DOW going in the tank to offer you the most astonishing, fear inspiring and pure jaw dropping statistic of ‘em all.
Circa 5.4 million American homeowners–yes your neighbors, brothers and friends–with a mortgage were either behind in their payments or already in foreclosure at the end of 2008 according to the Mortgage Bankers Association. That’s almost 12.4% folks. Swallow your sandwich before you hurl. It’s really that bad.
That compiles to one in eight households with mortgages. Please take a moment to process this data. More to come later …
BREAKING NEWS — Information regarding the mortgage relief bill is pouring in. Some of the broader points sounds good however the principal reduction side of things has yet to be fully articulated. Here’s what we’re learning you’ll need to be eligible to receive assistance:
- must be owner occupied & primary residence
- first lien only
- no minimum LTV
- 31 % or greater debt to income ratio
- loan balance must be under conforming loan limit of 729K
The modification itself can only occur once. After that, the government will throw you in a detention camp with former Gitmo prisoners. We’re just kidding, take it easy. The modification plan applies to all loans below $729K (no love for the jumbo folks again) that we’re written before January 2009. Possible restructing of mortgages can look as follows:
- as low as 2% payment
- term can be elongated up to 40 years
- principal can be reduced ***(no firm details here today)
- if borrower stays current can receive up to 1K/year toward principle for 5 years
Any questions? Leave ‘em in the comments.
We’ve been fielding a ton of questions about loan modification lately. Instead of “attempting” to get you the answers we decided to reach out to an insider. Dave Greek of GoProCapital is a mortgage and loan modification expert that has personally modified over 100 loans in the past year. Check out GoProLoanMod and download his free loan modification manual (or contact him directly if you want additional assistance).
If there are any more questions please leave them in the comments and we’ll re-post them with answers at a later date. Happy hunting.
How did you become an expert in loan modification?
That’s a great question because there are a ton of so called “experts” out there in the market today. Basically, I had to become an expert because I was a mortgage broker for the last 8 years and many of my past clients desperately needed my help. My clients either bought more house than they could afford or have suffered a financial hardship due to the failed economy.
It’s very sad to see but considering I handled their loan transactions, I have a moral obligation to do my best to keep them in their home. Plus, I already had the valuable relationships with folks inside large banks — making it easier to get the ball rolling on the loan mod side. Many people blame brokers for the crisis but I feel we were simply a messenger for the greed that was circling the major financial institutions. I also feel some of that greed ran through to the borrowers as well. When a next door neighbor shows up with a new Mercedes because he/she refied and took cash out due to his/her home appreciating 20% in 6 months, there was no reason we couldn’t do the same thing right?
Bottom line is everybody thought it would never end and they lived way above their means by leveraging their home and using it as an ATM machine. I was just as guilty of that. Now it’s my job to help fix some of this. I studied and read every piece of information I could get my hands on and compiled it all into a reference guide for my staff. I recently decided to offer it to borrowers as a book at no cost.
We’re hearing a great deal about loan mods in the news these days. What are the biggest misconceptions?
The biggest misconception I hear is that most people think they need an attorney or a professional modification company to handle their own loan modification. This is totally untrue but TV and radio ads tell a different story. These ads paint a picture that brokers misled borrowers (pointing to RESPA violations in the loan paperwork) and unless you hire a professional to sift through all that garbage you won’t get approved. This is false. You either have a hardship or you don’t.
Over 50% of all foreclosure happen without the borrower ever speaking with their lender. Many people think that once they’re late it’s over. They feel embarrassed and have trouble picking up the phone to call their lender to negotiate. It’s a difficult and unfortunate situation and easy to ignore. Lenders want to hear from borrowers. Banks want to keep borrowers in their homes and would rather deal direct with the borrowers then with an inexperienced loan modification company.
Can the everyday borrower really negotiate a loan modification on his or her own?
It’s not hard to negotiate your mortgage but there are a few tricks borrowers need to know that will help. The first trick is being prepared. Have your financial information at hand when calling to negotiate. You need the following items:
- Bank statements
- Monthly obligations
- W2s
- Loan paperwork
- Checking and savings account balances
- Tax returns
- Subordinate financing statement (if applicable)
Another trick is to be cordial and transparent (sounds like common sense but you wouldn’t believe how many people call ticked off. Lender CSRs are overwhelmed and often get beat up by callers. Being friendly has worked for me practically every time. I’ve even had reps tweak the numbers in order to get approved. Your main goal is to get past the first call. With most lenders the first point of contact is a screening process that is designed to gather information about your financial situation. This data gets inputted into a computer allowing the CSR to obtain an immediate decision.
If the financial information looks bleak, the CSR can render a denial right there. Don’t fret, it’s not completely over if this happens. My book shows ways to get back in the game. If the numbers are acceptable, then you can get to the next level which is a review of financials and a manager assigned to the file. Up until last week you needed to be late on your mortgage or have a financial hardship. This may include job loss, a medical issue, an ARM loan resetting or anything that affects your income or your current payment. The rules are changing daily and it’s not always required under the new rules. Bottom line is: the prepared and kind folks can negotiate their own mortgage. Continue Reading »
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