Until I tell them about “Loan Modification”.

I don’t actually do loan modifications — it is a process and negotiation between a legal firm and a lender where the legal firm negotiates with your current lender to get you into a better loan.  Often times as a result of these negotiations, the loan that people end up with is a better loan that I could have gotten them if they would have refinanced with the FHA Secure mortgage program!

Here are a few signs that you may be a candidate for loan modification:

• You are currently behind on your mortgage payments
• You have recently been denied when applying for a refinance of your current loan
• Your interest rate has adjusted or is going to adjust soon
• You have a prepay penalty on your current loan
• When you got your current loan, something “just didn’t seem right”
• You are concerned that you may soon be facing foreclosure or are currently in the foreclosure process
• You have some sort of hardship that is causing you financial difficulty

These are not the only signs that the loan modification process can help you, but it is a start.  Loan modification is not free (have you ever met a lawyer who would work for free?  I haven’t!) but if your options are either loan modification or foreclosure, it is definately worth it!

Call or email me and I can show you how to get started with the process.

WASHINGTON - U.S. Department of Housing and Urban Development Secretary Steve Preston today announced that 300,000 families have refinanced their mortgages with HUD’s affordable mortgage insurance program. Since September 2007, FHA Secure - the Federal Housing Administration (FHA) refinancing product - has provided struggling families with expanded access to safe and affordable mortgage financing. FHA is on pace to help 500,000 families by the end of the year.

“FHA remains a source of hope for families who want to stay in their homes,” said Preston. “The Bush Administration’s smart, practical solutions to expand FHA-insured financing are offering a safety net for hundreds of thousands of families in need of affordable home loans. We are focused and determined to work through the current challenges in the mortgage market.”

Because so many people in today’s world are having trouble making their mortgage payments on time, lenders are hiring people in their “loss mitigation” departments so there is a better chance than ever before that you can actually talk with someone.

When talking to your lender, here are a few of the ways that they could possibly help you if you are having trouble making your mortgage payments:

1. They could be willing to accept a partial monthly payment for a period of time and put the rest of the payment that you can’t afford to pay into the principal balance of the loan. Effectively, they will allow you to “tack on” money that you owe to the back of the loan. This might be a good solution if you are experiencing a temporary situation such as job loss or a short-term illness or family situation.

2. They could allow you to “skip” a payment (or two?) and have the missed payment added into the total loan amount. Again, this may be a solution if the financial problems that you are experiencing are temporary.

3. They could waive late payment fees that may have accumulated. This may be a solution if you have several late payments already and are just trying to get caught up. This is probably the simplest option of all of these listed.

4. They could set up a payment plan with you for an extended period of time (think 12-36 months) where they will add a fraction of your outstanding loan payments to your payment each month until you are caught up. For example, if you are currently $2,400 behind, you might be able to set up a payment plan where you pay $100 extra each month for 24 months.

5. They could offer you a completely new loan with a new amortization schedule. I see this happen the most when people use a loan modification company to help them negotiate with the lender. Usually, the loan modification company is getting people a 5.X% 30 year fixed rate (better than you could get refinancing in today’s market). The reason that the loan modification company is usually able to do better than just the consumer in negotiating this is because there are truth-in-lending (or similar) violations in the original loan and they use that to your advantage to pressure the loan servicing company into giving you a competitive fixed rate.

6. They could simply do a “principal reduction”. I see this happen most often in some combination with #5 and when done by a loan modification. Most of the time, it seems that consumers are just not aware or savvy enough (who would be?) to know all of the options that are available to them but a principal reduction is more common than you may think in today’s world.

These are only some of the things that are possible when working with your current lender if you are having problems making your payment.  I am sure there are more ways that a lender can be creative if they want to help you — and when it costs so much to actually foreclose on someone, believe it or not… lenders just want you to make your payments — they don’t actually want your house!

If you have any more questions about your MIP account or why you would be getting a refund, just let me know!

Some highlights in the story about LoanSafe and quotes from it’s CEO Moe Bedard include:

• LoanSafe charges a flat fee to analyze loans and according to Moe, they have found problems in at least 80 percent of the 300 or so mortgages they have examined.
• Among the problems found were notary problems, Truth-in-Lending-Act (TILA) violations and Real Estate Settlement Procedures Act (RESPA) violations.
• One common violation occurs when the interest rates or fees change between the time a borrower initially receives a cost estimate on the mortgage and when the borrower actually closes the loan.

According to Moe:

“When presented with these findings, most lenders and servicers quickly agree to a loan modification and many of the deals that my firm has arranged have an initial interest rates in the 3 percent range.”

Could you afford your mortgage payment if you had your lender modify it to a 5.5% fixed rate?

If so, let me know and I can put you in touch with the best in the business.

Are you in this boat?

If you are currently in an FHA loan, you may be able to do a no-appraisal FHA Streamline and it won’t matter that you owe more than your house is worth.  That is good news for the small number of people who are currently in an FHA loan!  For the rest of the people who are currently NOT in an FHA loan, there is still hope — recently, lenders have become more and more willing to work with people to do a “loan workout” or a “loan modification”.

This is a new area for lenders — previous to a few months ago, lenders generally were only interested in “getting their money back”, but with the record number of people who are facing serious difficulty paying their mortgage, lenders are becoming more and more willing to be flexible so that you can stay in your home and that the lender doesn’t incur the costs of foreclosure.

Loan modifications can take a number of different roads — from extending the initial interest rate for another X years (5 seems to be common), to reducing the amount that you owe (called a principal reduction), to getting you into a completely new fixed-rate loan, to… well, there are any number of possibilities.

The key part to beginning the loan modification process is to PICK UP THE PHONE AND CALL YOUR LENDER.  Some lenders are easier to work with than others — so if you run into a lender who is not willing to work with you, there are still people who can help you.

This week, Justin was in Corona, California meeting with a couple of different organizations who have attorneys on staff and whose mission is to help homeowners who are facing serious trouble regarding their mortgage.  They have helped hundreds of people and will help thousands more over the next few months.  They are the best in the industry and take pride in working with lenders to get people into affordable mortgage programs by going through the loan modification process.

Have you tried to refinance but been told that you can’t because you owe more than your house is worth?

Contact me and I will be happy to put you in touch with the right people who can work with your lender on your behalf to help you get out from under your current toxic mortgage!

Back in February, I reported that HUD had begun mailing 280,000 mailers to homeowners urging them to look at the FHA Secure Mortgage program and commented:

“In a press release, HUD officials HUD officials said the first round of 280,000 letters was sent this week with another 570,000 letters to be sent through September 2008.”

Yesterday it was announced that HUD was now going to drop part 2 of their mail campaign for the FHA Secure Mortgage program — by mailing out 670,000 more mailers.  If you are having trouble paying your mortgage, chances are you might be getting a letter from HUD with the following content:

Dear Homeowner,

Do you need help with your mortgage?

Your area is experiencing a disturbing home foreclosure rate that has accelerated in recent months. News reports cite the damaging effects of “sub prime loans” as a major factor in the unsettled market. By focusing on education and safe mortgage alternatives, though, the Federal Housing Administration (FHA) of the United States Department of Housing and Urban Development (HUD) is working diligently to address this unacceptable foreclosure trend.

Over the past few months, FHA has worked with mortgage loan servicers to identify solutions for the crisis facing current homeowners. Your current mortgage does not have to be FHA insured for you to benefit from our help. If you are facing financial difficulties due to a recent or imminent mortgage reset, or other housing-related difficulty, I urge you to contact us at 1 (800) CALL-FHA or to visit www.fha.gov. There you will have the opportunity to learn about foreclosure prevention, legal rights, and credit counseling, among other topics.

Many homeowners may also be able to take advantage of our recently announced FHASecure program. This new program allows eligible homeowners to refinance into a secure, fixed-rate FHA loan even if they are in default.

Additionally, a new partnership between mortgage companies and non-profit housing counselors called HOPE NOW is available to you. Their mission is simple: reach out to homeowners who may be having difficulty paying their mortgages. For more information or to see if your mortgage company is a member of this caring coalition please go to www.hopenow.com.

Again, please contact us at 1 (800) CALL-FHA (800-225-5342) or go to www.fha.gov. As part of the federal government, the Federal Housing Administration wants to help you protect and preserve the American dream - your home.

Sincerely,

Brian D. Montgomery
Assistant Secretary for Housing
Federal Housing Commissioner

According to the press release, the FHA Secure Mortgage program “allows borrowers who are current and delinquent on their loans to refinance with the FHA, is saving tens of thousands of families on average $400 a month compared to their exotic subprime loans.”

So if you are having problems paying your mortgage and are currently in a subprime loan, take the time to speak to a mortgage professional and find out if the FHA Secure Mortgage program is right for you.

If you have reached the point where you recognize that you can’t make your mortgage payments going forward, it is time to act. The best time to act is as soon as you realize that you are not going to be able to make your payments… Don’t delay!

If you aren’t interested in keeping your home – skip the rest of this post and learn about – “Jingle Mail!”

If you want to keep your house, here are five simple steps to follow that could end up saving your house.

1. Do Something.
2. Start With Your Current Lender.
3. See If You Can Qualify For a “Regular” Refinancing Option
4. Talk To A Housing Counselor
5. Sell Your Home

Step 1 – Do Something.
So… you are currently late on your mortgage. The future of making your mortgage payment as it now stands seems like an impossible mountain to climb.

You may be 30 days late.

You may be 60 days late.

You may be 90 days late.

You may have been 30 days late for 3 months running.

For this step in the process, it doesn’t really matter how many lates you have had in the past 12 months or how many days late each of those lates were… if you are in the situation where you are currently late on your payment…

DO SOMETHING!

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According to an article by the AP, there are several plans circulating the House, Senate and White House that call for expanding the FHA programs to help struggling homeowners with an option to save their house.

While nothing has passed yet, the bills are gaining a lot of attention because many homeowners have no current option to refinance their home due to the fact that it is “under water” — meaning they owe more than their home is worth.

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