Could a Loan Modification Prevent Your Foreclosure?
- By:
- Bill Rice | August 26, 2008
The Federal Deposit Insurance Corporation (FDIC) is offering delinquent IndyMac borrowers significant concessions on their past due mortgages--lowering interest rates to as low as 3%, extending terms to as long as 40 years, waiving traditional loan modification fees, and holding payments under 38% of borrower's gross income.
This leaves a lot of homeowners wondering why only IndyMac borrowers are getting such a good deal. Well as it turns out the FDIC's program is not as unique as it sounds.
In a recent statement by FDIC Chairman Sheila C. Bair she advocates "a systematic and streamlined approach to loan modifications to put borrowers into long-term, sustainable mortgages." The hope, according to FDIC officials is that this program will be come an industry model.
Although certainly not streamlined or mainstream loan modifications are generally available to all borrowers in trouble. A loan modification, also known as a modified refinance, is simply a negotiation between a lender and a borrower that yields a restructuring of loan terms without refinancing. This often means a new payment and rate.
"You can certainly try to do a loan modification on your own and not use a professional service," but Michael Geffre of Entrust a San Diego loan modification company with over 9 years experience, "80% of these attempts fail."
Many borrowers in need of a loan modification are finding it difficult to get started. Calling a lender directly can lead to confusion or loan officers attempting to refinance already troubled mortgages into worse.
Most lenders have not set-up processes to handle a high volume of loan modification request. This can lead to requests being bounced around or even lost until it is too late to avoid foreclosure.
Most experts suggests that if you are having trouble making your mortgage payment or facing a significant interest rate or payment adjustment to search out a loan modification expert as soon as you are served a Notification of Default.
"Although we can help most people right up until 10 days prior to a foreclosure sales," says Geffre, "there is a complex set of procedures, negotiations, and documentation that needs to be completed. In some states this process needs to be performed by an attorney or properly licensed counselor."
There is a lot of pressure for banks to modify loan terms and keep borrowers in their home. Considering the current housing marketing and declining home values, lenders are often finding loan modifications more financially attractive than the expenses of foreclosure.
However, it seems that the key to borrower success is navigating the red tape and unfamiliar internal processes at banks and lenders--lenders that are performing large volumes of loan modifications for the first time.
Hope Now Gaining in Foreclosure Prevention as Loan Modifications Increase
- By:
- Bill Rice - MortgageLoan.com | December 03, 2008
The Hope Now initiative, a private mortgage lender and servicer alliance, is increasing its effectiveness in preventing foreclosures. In October, Hope Now set a new record in foreclosure prevention modifying 225,000 mortgages. That total exceeds September's loan modifications by 13,000.
Law Firms and Banks Collaborating to Streamline Loan Modifications
- By:
- Bill Rice - MortgageLoan.com | December 02, 2008
Increasingly loan modifications are becoming the preferred mechanism to help defaulting homeowners and troubled bank mortgage asset portfolios. All of the major banks, Bank of America, JP Morgan Chase, and Citigroup have announced streamlined loan modification programs.
US Retailers Hope for a Big Cyber Monday
- By:
- Bill Rice - MortgageLoan.com | December 01, 2008
Retailers got a welcome Holiday gift on Black Friday, with retail sales actually rising 2 percent over last year. Despite the doom and gloom of economic prognosticators consumers lined the sidewalks in the wee-hours of the morning for "door-buster" deals.
Retailers Caught Flat-footed by Rapid Economic Slowdown
- By:
- Bill Rice - MortgageLoan.com | November 28, 2008
It's Black Friday, will they come? Black Friday a term linked to the fact that traditionally all retailers "make their year" by blasting into profitable territory for the entire year on the strength of holiday sales. This year may be a stark contrast.
President-elect Obama Subtlety Taking the Reigns of US Economic Policy
- By:
- Bill Rice - MortgageLoan.com | November 27, 2008
In his regular press conferences behind the very Presidential-looking "Office of the President-Elect" podium Obama quietly is absorbing the Presidency. Despite being 11 weeks away from inauguration and still two weeks away from officially being declared President-elect by the convening of the Electoral College, he is undeniably taking the reigns of US economic policy.
Federal Reserve Starts Printing Money to Jumpstart Lending
- By:
- Bill Rice - MortgageLoan.com | November 26, 2008
The Federal Reserve and US Treasury have announced another bailout, this one theoretically for consumers and small businesses. This plan involves another $800 billion.