Finance Tips

Each day, thousands of American families are losing their homes due to bank foreclosures. Hard working people like you and me who fell prey to predatory, shady lending practices that promised us great homes at great prices with “incredible financing options.” The truth of the matter is that they never disclosed the full terms of the financing and that is what is forcing people into bankruptcy and to lose everything they own when they wake up one day to discover that the dream is gone and now they are stuck in an home that is worth a lot less than what they owe.

Are You Behind On Your Mortgage?

Look, if you are behind on your mortgage and you owe at least $100,000 still on your home loan, then you can apply for a loan modification plan. This is by far the safest and best way to avoid losing your home and end up living on the street or some relative’s basement or spare room.

I am sure that you want to spare your family from the public humiliation of having a big sign on the front of your home that says “foreclosure!”, correct? Well, then the time to act is now.

What is a Loan Modification?

Listen, a loan modification is a very simple process on which the terms of your mortgage are reviewed and modified in order to make your payments affordable and therefore giving you more financial freedom.

This way, you can keep your home and keep your family safe and with a roof over their heads. Remember, if you are behind on your payments and if you are losing sleep thinking about avoiding end up on the street, then it is time to speak to a loan modification expert. There is hope, you can still save your home!

With Obama’s Home affordability plan in execution since March, 2009, hopes of many disheartened homeowners have been restored. However, there are many apprehensions regarding the efficacy of the plan. “How will the plan lower mortgage payments?” – is the most prevalent question. Let’s understand the procedure in detail.

There are two parts of the Obama Home affordability plan. One is refinancing, and the other is loan modification. With the sharp fall in property rates, many homeowners could not avail a refinance because their loan-to-value (LTV) ratios are too high for them to meet the criteria for a refinance. However, under the Obama Home affordability refinance plan, homeowners with an upside-down loan can also avail for refinance. People with a variable interest rate home loan can shift to fixed rate loan with lower interest rates than the current loan’s. Such a low-cost mortgage refinance loan will save those thousands of dollars annually.

Homeowners who do not meet the eligibility criteria for refinancing can apply for mortgage loan modification. People have lost jobs or have encountered cutbacks in paychecks due to the economic slump. So, the monthly mortgage payments take up a chunk of their income. The home loan modification program assures that the monthly payments do not surpass 31 percent of an individual’s monthly income. Borrowers can avail for interest rates as low as two percent, and repayment duration as long as 40 years. Hence, low monthly payments are guaranteed. The principal amount in not reduced under the plan though. Lenders are not forced to participate in the program. However, the program is, in most cases, more profitable than foreclosure. Hence, they choose to modify the mortgage. There will be a three-month trial period with the new loan terms. If the homeowner is still current at the end of the ninety days, the modified terms stay in effect for the next five years. An interesting incentive for borrowers is that they can receive up to $1,000 for five years as long as they stay current on their payments. However, the money is used to pay down the balance on their loan. It is not handed over to the homeowners lest they spend it away.

A retiring Chicago city employee had her home loan with CitiMortgage modified to 2 percent on a 40 year amortization and granted a two month payment holiday to rebuild reserves. Her husband has social security and a small pension but She was facing a large drop in pay as her retirement date of June 30, 2009 was fast approaching.

She would be receiving a pension at only 40% of her prior pay and she didn’t have enough social security quarters to draw her own benefit. They had never been late on their mortgage so making a case for not being able to afford it might look opportunistic. I was very reluctant to take on this client because 31% of their future combined income was so low that I just couldn’t imagine CitiMortgage coming through for them so I advised that they try to sell the property while I made their plea for Making Home Affordable (MHA) with CitiMortgage.

They had listed their home with a local realtor and weren’t able to get any bites even at what they owed so this was a scary situation all the way around. I have only the highest regards for CitiMortgage loss mitigation department because they were willing to work on preventing a train wreck rather than watch idly by. This was a fairly aggressive loan mod application because our client maintained her perfect credit and headed off future problems by contacting us in advance of her drop in pay. See www.illinoismortgagemods.com to read more typical results.

A St. Charles residential contractor gave up on waiting for building to rebound and retired to a small carpentry pension and social security. I prepared his Chapter 7 bankruptcy so that he could strip away all his other debt and try to hang onto his home. I then submitted a mortgage modification request to Chase/EMC and they very generously modified his subprime loan into a prime loan and cut his payment by 50%. There is now no question he will be able to afford the payments going forward and enjoy retirement as a homeowner.

The economy is getting worse day by day and there is more bad news with more jobs cut off. Every time you turn on the television you will hear same news everywhere making unbearable for anyone to watch news fearing what will happen next. Major disadvantage appear for people who lost their jobs, got lose their incomes and then cannot afford to pay off their mortgages in months they find themselves in arrears. In fact, even today American’s housing problems are still increasing and rising higher as the public’s hope of Obama’s loan modification program seems to absolute in its own juices.

But now the good news is with Obama’s loan modification programs can help you to avoid this and you do not have to be behind with your payments or in trouble to take benefits of it. Major American’s have watched the long and dynamic national deliberate on the misunderstanding and complication of President Obama’s loan modification program. The basics of Obama’s loan modification plan deals with detail the bail out of house owner’s from the possible loss of their homes.

Big parties, like the commercial banks and mortgage companies, have just come away smelling like money from the previous government bailout of their once struggling companies. All that discuss has really fueled though, is more wide spread misunderstanding of how the payment of the nearly nine million dollars will actually be put into action. With the number of foreclosures on a steep increasing many homeowners want to know regarding the different options available which could help them to save their homes.

One of the most strong and helpful solutions to avoid foreclosure is home loan modification. If you’re trying to get eligible for the Obama loan modification plan, there’re a few things you should be aware of before going for program. Number of people might qualify; however what you inform your lender might make or break your possibility. There are strict guiding principles for getting qualified for this loan modification plan. If you try to call your lender on your own, you would simply get denied.

The Obama loan modification program is in fact very good for homeowners. If you get eligible for loan modification, you would lessen your mortgage payments up to 31% of your entire income. This is accomplished in some ways.
1. Your lender would decrease your rate of interest. It’s possible to lower your rate of interest down to 2% under these guidelines. If this doesn’t get your expenditure down to 31% of your entire pre tax monthly earnings, they move on to the subsequently step.
2. Your lender would lengthen your terms. If they lower your rate of interest all the way down up to 2% and you still don’t come in at 31%, they would lengthen your terms. For instance, if you’re in a 30 fixed loan they would modify your loan up to 40 year loan to lessen your payment.
3. Even if you can’t meet the 31% condition, your lender would then decrease your principal. They could also put off your principal to a later on date. All of these alternatives are great, due to if you are stressed to pay your mortgage payments this is going to lower them considerably. In case you have tried contacting your lender and were rejected for Obama’s loan modification program, you may get in touch with some reputable loan modification company which would help you in getting qualified for loan modification program.

Over the last two years, tens of millions of people have learned far more about loan modifications than they ever thought they would. The economic crisis and real estate crash forced people caught in difficult situations and overwhelming mortgages to look for their best options to keep their home. Foreclosure signs littered entire neighborhoods, and the state of California was thrown into a tale spin from which is has not yet recovered.

The question then becomes “how can I keep my home in spite of everything that’s happening?” The answer might be different for everyone, but one thing is for sure, a California loan modification attorney might just be your new best friend. It has become clear that Wall Street’s interference with the real estate industry has caused more chaos than every before. Entire neighborhoods used subprime mortgages to buy their homes, and as a result those neighborhoods are at risk of total collapse.

Contrary to popular belief, loan modifications have been around for a long time, helping people throughout California, and the rest of America, stay in their homes. Yet, since our current economic crisis has led to so many foreclosures and bankruptcies, homeowners, politicians and even lenders are trying to find the best way to get a loan modification.

In order to qualify for a loan modification in 2009, here is some information you might want to know:

Every creditor and lender has their own loan modification guidelines. For example, the loan modification process at Wells Fargo might be completely different than the one at Washington Mutual. It’s vital that you spend time learning your lender’s criteria, and how their loan modification application works.

Learn about your debt ratio. A debt ratio lets you know how much you owe versus your monthly income. Your lender will use this information to determine the new target amount of your monthly mortgage payment.

Your disposable income is important. You are going to have to take stock of how much you spend each month, if you haven’t already. Loan modification applications include a financial statement which represents a complete breakdown of how much money you bring in every month and what your expenses are. The person applying for the loan modification has to show all of his or her monthly bills against the monthly income in order to prove it’s possible to continue to make monthly mortgage payments at a lower rate.

Hardship letters are an important part of the process. Possibly the most important part of the loan modification process is the hardship letter which details your explanation of the financial situation you find yourself in. It also explains why you want to keep your house and your future plans. All of this will give the lender a clear picture of your situation.

As you can see, the loan modification process is not simple, and in fact it requires a great deal of preparation, research and knowledge to execute properly. Contact a loan modification attorney today to help you carry out your loan modification application in the best way possible.

Visit us at http://www.feldmanlawcenter.com or call 800-588-0425

Legal Disclaimer

The information contained herein is provided for general information and advertising purposes only and is not intended to convey a legal option nor legal advice for any particular case or situation. Nothing in this article shall create an attorney-client relationship. Nothing sent to this law office via e-mail shall constitute an attorney-client relationship. Nothing contained in this article shall be construed to be a guarantee or prediction of result. Prior results are provided for general information purposes only and do not guaranty, warranty or predict a similar outcome with respect to any future matter. Results achieved depend on individual circumstances and not everyone will qualify or be successful in restructuring their mortgage loan.

Author: Greg Feldman

Obama’s loan modification plan is available for borrowers facing financial hardship and at risk of losing their home. Under this program, your home loan could be revised so that your monthly payment is reduced to an affordable amount. The goal is to keep families in their homes, stop foreclosures and allow the economy to recover.

The plan is called Home Affordable Modification Program-or HAMP. This home retention plan is paid for by the federal government-your tax dollars-so do not hesitate to take advantage of this helping hand. Over 5 million homeowners are expected to benefit under this $75 billion government program. Here’s the basics of the plan:

1. All homeowners who ask for consideration must be reviewed for eligibility-even if they have been turned down previously
2. Borrowers must show evidence of a financial hardship or the imminent risk of default
3. Lenders must follow a standard formula to determine if a borrower meets the federal qualification guidelines-reducing the interest rate to as low as 2%
4. Homeowners who meet the basic guidelines will be asked to submit a loan modification application, including a financial statement and proof of income

The banks are motivated to modify as many loans as possible for a couple of reasons. The lenders will be paid by the Treasury Department for each loan they modify using the standard federal terms. Also, President Obama has strongly encouraged all banks to reach out to homeowners to offer this plan-whether they are behind on their payments or not. If a financial hardship exists, then a homeowner is encouraged to begin the application process.

What should you do if you need a 2% mortgage modification? The first step is to learn more about the federal guidelines for approval and just what it takes to meet those guidelines. Do not complete your paperwork or disclose your financial information until you understand the 4 step formula your bank will use to qualify you. This is not the time to take any chances. Learn, prepare, then apply-this is too important to risk denial.