CASH TO CLEAR OUT?

Hopefully the updated guidelines recently released by the Treasury Department will speed up loan modification processing and enable the hundreds of thousands distressed residential owners to keep their homes. The administration is ensuring that steps are taken to constantly clear up the glitches that have been causing delays in modification approvals.

Despite federal loan modification programs to help these struggling homeowners, there are still some lenders who silently refuse to play the game and are proceeding with foreclosures instead.  Probably, they may have a pool of investors ready to take on undervalued properties for their investments.  But foreclosure proceedings are bloody and can cost a lot. Because of this, some lenders have resorted to a new tactic: They are quietly paying delinquent homeowners to more out and find another place to live.

This strategy is known as “Cash for Keys” and most lenders and banks are not talking about it in public.  In most cases, the ex-owner gets thousands of dollars to help them relocate.

Lenders find it more feasible to offer cash instead of paying to evict people out of their homes – hopefully, a decent amount to assist them can encourage irate homeowners to leave peacefully instead of intentionally damaging the homes the leave behind.

Lenders stand to lose more than just unpaid monthly dues when they foreclose on a home.  Plumbing and electrical fixtures are taken, and so are appliances, doorknobs and even cabinet handles.  It’s not unusual to see holes on the wall, a damaged carpet and graffiti all over the home.

Even unsuspecting tenants renting homes that are foreclosed get the “Cash for Keys” offer. Many landlords wilfully withhold foreclosure information from their tenants in a last attempt to continue collecting rent. These poor tenants only find out when a bank representative comes to the house to serve the notice. 

In some cases where new owners, mostly property investors, do not intent to use the home as their primary residence, tenants are allowed to stay in the home until the lease is up, or they even get to start off with a new lease with the new owner. The instances are few, but these are the “killing two birds with one stone” deals some lenders can arrange.

The “Cash for Keys” is a good alternative, but it is foremost for homeowners to first find out if they qualify for a loan modification.  Nothing measures up to the devastation caused by losing a home to foreclosure, so if options are available – why not take it?

To learn more about loan modification: CLICK HERE

Loan Modification Approvals to Speed Up by February 2010

The federal administration has taken bolder steps to speed up recovery in the housing arena which has suffered the biggest slump in this economic downturn.  After sitting with loan servicers and observing practices undertaken during the loan modification process, it has been observed that much of the delays in loan re-works lie on the back-and-forth procedures that take place between the borrower and the lender.

 

The Treasury Department released anew updated guidance for servicers working with the Home Affordable Modification Program (HAMP) on January 28. While the previous guidelines only required borrowers to submit stated income to qualify for evaluation for a trial modification, new requirements necessitate the submission of verified income to cut short the long process towards an approval.  It was observed that when borrowers complete their trial payment periods and qualify for permanent status, this is only when income verification is done.

 

Employees from the US Treasury’s home preservation office sat down and observed first-hand procedures carried out at servicers’ sites for an entire month and decided that changes needed to be implemented to speed up documentation procedures for a loan modification. By ensuring that all the necessary paperwork is done and an application package is in order before a modification begins, qualified borrowers who get through the trial payment period are automatically granted permanent modification thereafter.

 

A lot of the conversion problems prior to this new announcement were caused by time delays, as borrowers had to go back and forth through time consuming document verification so they can upgrade their modifications into permanent status.

 

Effective immediately, loan servicers will require upfront verified documentation for income and other pertinent paperwork from loan mod applicants. Those who have started last Thursday have seen notable improvement in their conversion rates.

 

For borrowers intending to apply for a loan modification, it helps greatly to have all the required documents when you begin to work with your lender or servicer.  Do-it-yourself loan modification kits which provide templates, pricing comparison reports, hardship letter formats and a complete list of all necessary application documents can help you put together you loan mod application. Check them out so you can go though the modification process without the time delays and the hassles.  Options are available at: http://www.ucanbeatthebanks.com/

Adjustable Rate Mortgage (ARM) Resets: A Bubble Waiting to Burst

In the early 1980s, adjustable rate mortgage or the ARM was the byword in the housing industry. It was every American’s ticket to finally owning a home. With very, very low payments to make each month, the ARM was an ideal home ownership package every working citizen would afford.  It seemed like a workable deal – the five years of interest only or very minimal monthly dues would allow a borrower to work his butt off and save up for the principal dues once the loan adjusts.

Today, fewer borrowers are asking their lenders for an ARM.  With all the bad publicity attributed to ARM resets causing an upsurge in foreclosures, everybody seems to be avoiding it like the plague. To add to that, fixed rate mortgages are currently enjoying record lows in terms of interest rates.

Freddie Mac reports that of all conventional home purchase loans in 2009, a mere 3 percent comprise adjustable rate mortgages. Compare that to 62 percent in 1982, last year was an all-time low for the ARM.

Fixed rate lending is currently dominating the market due to a 50-year low on interest rates and the assurance that a fixed principal and interest payment is going to stay just that – fixed.  That didn’t matter five years ago; the lure of easy, ridiculously low monthly payments was just too irresistible to recognize the fine prints. But today’s housing crisis has taught us a better lesson – Better to be sure than sorry.

Experts even fear that adjustable rate mortgages taken out during the housing boom are coming close to flooding the housing market with another wave of defaults and foreclosures. $71 billion worth of interest-only ARM loans are scheduled to reset in the next 8 months with another $100 billion following a year after. The period from mid-2011 to mid 2012 projects another $400 billion resetting, and in a significant number of cases, increasing the borrower’s monthly mortgage payment by  as much as 75 percent of what they are paying now.

As loan principals on ARM mortgages start amortizing beginning the last quarter of 2010, that nation might just see another mortgage crisis as dire and large as the subprime. The imminent peril of ARM resets is like a bubble ready to burst – and it is definitely something worth preparing for.

 

Explore the options to modify your loan and get lower monthly payments: LOAN MOD OPTIONS

Imminent Default Cases Get A Nod at Loan Modification

Hope continues to rise for the distressed American homeowner. Just this Friday, January 22, HUD made another welcome announcement enabling distressed homeowners with FHA-insured mortgages to qualify for loss mitigation assistance even before they go into default. Previously, a homeowner can only be eligible for such assistance after they had missed a series of payments on their monthly mortgage dues.

The Helping Families Save Their Home Act of 2009 signed into law by President Obama widened the scope of the Federal Housing Administration’s authority, empowering it to include borrowers who are facing “imminent default”.  Guidelines were issued to loan servicers Friday, setting the parameters on how assistance is to be provided before homeowners get into default.

Existing FHA guidelines prior to Friday’s announcements had only required lenders to communicate with borrowers after the latter had missed a payment.  By law, lenders have to initiate action to confer with their borrowers so they get an explanation for the delinquency and assess reinstatement options. But with this new expansion of FHA’s authority, loan servicers will now have additional options to offer homeowners who seek assistance before they go into default.

Previously, a lot of homeowners would intentionally go into default so they get the attention of the lenders. It was a “negative attention is better than no attention at all” thing. No other option was available for them to communicate their quandary in keeping up with their monthly payments. As the saying goes, “If you can’t beat them, join them!”

So effective immediately, forbearance as a loss mitigation option can now be applied to assist borrowers facing imminent default.  FHA defines the term “borrower facing imminent default” to be one who is current or less than 30 days past due on his mortgage obligation, and is experience a significant reduction in income or some other hardship that will prevent him from making the next required payment.

Under the FHA’s forbearance program, loan servicers can allow the postponement, reduction or suspension of payments due on a loan for a specific limited time period. The agency allows qualified FHA-insured borrowers to lower their monthly dues to an affordable level through a permanent reduction using partial claim in combination with a loan modification. Partial claim defers repayment on a portion of the mortgage principal through an interest free secondary mortgage that isn’t due until pay-off on the first in completed. Then the remaining balance is modified through re-amortization  or interest reduction.

As in all case scenarios, the borrower must be able to attest to the cause of imminent default through proper and complete documentation. Probable causes include unemployment or a pay cut, any change in household financial circumstances such as death in the family, serious illness, divorce or any other condition that can cause a drastic drop in household income. Of course, such cases should be verifiable.

On the loan servicer side, parameters used to determine that a delinquency is imminent should also be outlined and documented. All pertinent documentation to their conclusion should always be retained and must include information on the borrower’s financial condition.

If you’re a homeowner facing imminent default, you no longer need to miss your monthly payment intentionally to get your lender’s attention.  Start saving your home now by gathering all relevant documents you will need to put together a loan modification application. You can do it yourself with several options available. Check them out at: Loan Modification Options.

Loan Modification Significantly Doubles in the Last Month of 2009

Since it was initially launched in March of 2009, the Home Affordable Modification Program has enrolled close to a million distressed borrowers.  Of these, more than 110,000 have been approved for permanent modification with 60 percent having been accepted by the homeowners as final and the remaining 40 percent just needing the homeowner’s acceptance.

The U.S. Treasury department has noted a considerable uptick in the pace of permanent loan modification under the administration’s HAMP lately.  The end of November 2009 saw loan servicers awarding permanent mortgage relief to 33,000 borrowers and the Treasury’s latest progress report confirms that the number had doubled by the year’s end.

The Homeownership Preservation Office is committed to working hand in hand with servicers and borrowers to sustain and improve the loan modification process. It has taken a number of measures to assist servicers and speed up the system to give eligible homeowners the opportunity to salvage their distressed loans through HAMP.

These measures went as close to federal officials being on-site at servicer offices to certify that these companies were doing their jobs in delivering restructured proposals to borrowers for the trial phase. Much of the delays in processing were usually caused by missing documents and paperwork, and federal employees made themselves available to assist in the completion process. A temporary review period extending until the last day of January 2010 has also been implemented so borrowers can be assured that their cases are being fairly evaluated for inclusion in the program.

HAMP was devised to provide more affordable monthly mortgage payments that homeowners can sustain amidst the present economic downturn. On the average, more than 850,000 homeowners with those still in the trial period included, have seen their monthly mortgage dues drop by about $500.

Treasury officials claim they are on track in accomplishing the goals laid out by President Obama when the Home Affordability and Stability Plan was announced following his assumption of the presidency. The plan embraces a number of initiatives that go beyond just mortgage modifications. It also includes providing support to Freddie Mac and Fannie Mae so interest rates are kept low, tax credits to aid in the development of affordable housing, and support to state and local housing finance organizations.

To learn more on how to speed up you loan mod applications without the exorbitant fees, explore these OPTIONS.

Loan Modification Saves Nine Homes for Every Two That Are Foreclosed

 A recent government report accounted that bank and thrift servicers implemented more that 680,000 home loan modifications and payment plans in the third quarter of 2009. The Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision (OTS) said in mid-December that the number reflected close to a 69 percent increase in home retention moves over the previous quarter.

But while mortgage servicers continue to escalate their efforts to help keep people in their homes, repeated payment defaults continue to endanger home retention actions. The latest figures from the OCC and the OTS show that more than half of all loans modified in the early part of 2009 were again delinquent by at least sixty days or were into foreclosure six months afterwards. 

Modified loans may be getting into redefault at still a high rate but industry regulators have noticed that the more recent ones are generally exhibiting a more favourable performance, showing lower delinquency rates than those modified in the earlier part of 2009. This should be a signal that loan modification servicers have discovered the formula for more viable and sustainable loan workouts.

The 3^rd quarter report reflects only an 18.7 percent delinquency among 2^nd quarter modifications after a 90-day period, significantly lower by about 40 percent than those modified during the 1^st quarter. Regulators confirmed that the drop directly corresponded to the increasing number of modifications that lowered the borrowers’ monthly payments to more affordable levels.  Close to 80 percent of all loans modified in the 2^nd quarter were payment-reduced options, compared to just a little over 50 percent during the previous quarter.  The more welcome news was that payment-reduced options rose above the 80 percent mark in the 3^rd quarter of 2009.

Although clear progress is being made, loan servicers still have some difficulty keeping pace with the number of homeowners that are in delinquency. Serious delinquencies are at 6.2 percent while foreclosures in process surpassed a million mortgage loans, or an equivalent of 3.2 percent of the servicing portfolio.

Close to 300,000 trial plans were implemented under the administration’s Home Affordable Modification Program (HAMP) by November of 2009. Servicers also assisted homeowners by working on more than 400,000 separate home retention efforts outside of the HAMP program.

Overall data shows that significant efforts are being made in the battle against home foreclosure. The OCC and OTS reports show that servicers executed twice as many home retention moves as foreclosures in the third quarter of the year. That equates to nine families getting to keep their homes for every two that are lost to foreclosure.

Will Hell Be Ending Soon for the Distressed Homeowner?

The U.S. Treasury Department announced on December 1^st that it would put more pressure on mortgage lenders and servicers to translate more loans still on the trial modification status to permanent loan status. Hopefully, the anguish will end for many distressed homeowners who have been on the edge for quite awhile.

Government has dumped much of its funds into the biggest stimulus package there is, so it will be embarrassing lenders into doing more for its borrowers in the next few months. Beginning December, all approved lenders shall be using software that will allow government to tract its performance at loan servicing, measure trial and official period loan setup data, and monitor trial period loan activity. They will be required to do daily progress reports on the status of all loans in the trial period; likewise, they have to give government a projection as to when they foresee these loans to be permanent. 

And here’s where government will be tightening the reins on lenders. It seems payments have been made to servicers and processors for simply putting in applications for trial loan modifications. Probably that’s why borrowers haven’t been getting all the help they need. They don’t get follow up help after the applications have been submitted.

Now the Treasury Department is saying that it will only be making payments to lenders one the trial loans are on permanent status. They’re saying they will be “withholding payments” from lenders who are not doing enough to help the borrowers, which implies that payments have actually been made to lenders just for applications and not necessarily on getting them approved.

Hopefully, the more stringent measures government intends to slap on lenders will get more approvals and conversions from temporary to permanent loan status. Hell should be ending for millions of distressed homeowners if government is serious with its intentions – hopefully.

Speed up your loan modification process NOW!

Mortgage Default Risk at its Lowest Since Early 2008

There seems to be a marked improvement on mortgage default risk for the fourth quarter of this year. Chances that homeowners are unable to meet their monthly dues are gradually diminishing compared to those originated earlier in this housing downturn. According to the University Financial Associates (UFA) of Ann Arbor, Michigan, the likelihood that new mortgage owners will default on their mortgage accounts is at its lowest since early 2008.

UFA principals say that economic data gathered this quarter indicate that there is an emerging balanced recovery from severe recession. They did state however, that recovery will still be at a snail’s pace especially for the mortgage industry. Unemployment is still at a current high, and this has been the one lagging indicator that holds back the recovery factor.

House pricing has definitely moved toward more sustainable values and depreciation has significantly slowed down. It is nowhere near the horrific drop most stated experienced during the middle of last year, but the high incidence of unemployment is extending the period elevated foreclosures beyond what anyone had foreseen. And unless more jobs are created, these new mortgages may still end up in the same state as their predecessors.

Lower Your Mortgage Default Risk

How to Make a Compelling Hardship Letter for your Loan Modification

The most important document you will need in your loan modification application is the Loan Mod Letter or better known as the Hardship Letter. The hardship letter basically tells the lender why you had gotten into difficulty paying your monthly dues so it should clearly paint your current financial picture. This is your opportunity to tell your lender the circumstances of your difficulties and the steps you have been taking to deal with your dilemma.  Make sure your reasons fall within the “acceptable hardship” list and will guarantee the lender that if given the chance to adjust your monthly dues, the home loan payments will be made on time from then on.

These are the acceptable hardships from the lender’s point:

1. Loss of job or decrease in overall income
2. Death of the homeowner, spouse or family member causing added expenses
3. Illness in the family causing unforeseen expenses
4. Divorce or separation
5. Forced job relocation by employer
6. Adjustable rate reset-payment shock
7.  Increasing expenses (on basic necessities)

Now, there should be one or two reasons from above that speak exactly of your predicament.  You are raring to tell your lender about your story. Go ahead but keep in mind that lenders are up to their necks with thousands of other frantic homeowners seeking alternative solutions to keeping their homes.  Your hardship letter should be structured in a way that lenders will read on beyond your first paragraph and take your case into consideration.

Here are some valuable points the loan modification process has taught me regarding Hardship Letters:

• Keep your letter short, straight to the point but comprehensive.  Try keeping it all in one page or if you can’t, don’t go beyond the upper half of the second.
• Describe the hardships and the circumstances that caused them before getting into anything else.  Make sure you indicate the occurrence date so your lender can tie this up with your failure to make your payments in the past
• Relate what steps you have taken to address the situation.  If you or your spouse has taken additional part-time jobs, let them know.  Any additional income from your end will be good news to your lender
• Provide your lender with a clear plan of how you intend to get back on track
• Assure your lender that you are a responsible homeowner and impart all motivations you have on keeping your home.  If you have various community involvements or are a member of social organizations, tell this to your lender.  It may seem unrelated information to you but your lenders interpret this as something that drives you to maintain your status and reputation in your social circles

Million others face the same predicament as yours, and success in the loan modification process depends largely on how you work things out with your lender.  You need not engage the services of loan modification specialists who may charge you tyrannical fees to get your application going.  There are do-it-yourself kits that come with a complete guide plus on how to go about the loan modification process.  They include fillable forms that help you auto-generate compelling hardship letters and impressive payment proposals plus comparative market reports on your property. Your lenders will love receiving this type of application package from you as it means a whole lot less work for them.

You really don’t need a lot to successfully modify your loan. You simply need a little do-it-yourself assistance that comes with complete knowledge support on the whole process to get your application to the frontline. Check out one of these help tools at: http://www.ucanbeatthebanks.com/option1.php

LOAN MODIFICATION TRUTHS: Less Than 1% Benefitting from HAMP due to Incomplete Application Packages

With the government-backed Home Affordable Modification Program (HAMP), the demand for loan modification and loss mitigation assistance has risen to historic proportions.  US Treasury Secretary Tim Geithner announced on October 9 that the Obama administration’s HAMP had enrolled its 500,000 participant. Information from other related sources report however, that out of the 200,000 loan mod trials in progress,  less than 1300 borrowers have actually entered the permanent modification phase, which means they have been in the loan modification set-up for at least 6 months and are continuing to comply with their modified loan terms and conditions.  That’s actually less that one percent with the remaining 99% being in the 3-5 month trial period. 

Earlier in July, the HAMP originally targeted 500,000 home loan modifications by November 1st after it released the initial program guidelines early in March of 2009. Surely, it did enroll its 500,00^th participant for qualification procedures before the November 1^st deadline, but the truth of the matter remains that less than 1% are actually benefitting from the respite this program is suppose to provide every qualified distressed homeowner.

Michael Young, vice chairman of the Mortgage Bankers Association, attributes this snail-paced progress to the fact that 99% of loan modification application packages are incomplete.  This has led to the supposition that a large percentage of the 500,000 will never submit the necessary complete documentation to qualify.  Also of concern among loan servicers is the likelihood that some homeowners may just employ the trial period as a tactic to delay foreclosure proceedings on their properties.

 If you are one of those distressed homeowners serious about getting a modification on your existing mortgage, YOU, and not a loan mitigation expert or loan servicer,  are the best person to set things in motion.  No one will fight to keep your home better than you will, no matter how much experience and success rates these specialists boast of.  Together with a comprehensive guide on the loan modification process, all you will need is a professionally designed loan processing system that will give your lenders exactly what they need: a bank ready loan modification application complete with all the required documents, letter requests, projections and reports. Be on your way to modify your loan without spending thousands of dollars in professional fees!