Wednesday, July 15, 2009

The Ins And Outs Of The Making Home Affordable Loan Modifiation Program

President Obama’s administration’s $75 billion stop foreclosure plan to refinance and modify millions of homes, announced back in March, is a portion of the much larger Tarp II plan. If you are a homeowner in trouble of losing your home to foreclosure, or a homeowner that has not missed a payment, but would like to refinance to a lower interest rate, you have hopefully already started calling your servicer and asking for a mortgage modification or have contacted an Attorney based mortgage modification firm to handle the situation for you with the bank. The money used for this program comes from the $700 billion approved as part of Tarp I in late 2008.

The $75 billion dollar project deemed obama loan modification, pledges to make homeownership more affordable for as many as 9 million Americans. The program uses a combination of government subsidies and incentives (for servicer, lenders and borrowers) in an effort to reduce principal and lower interest rates on millions of American loans. Direct information on the details of the new plan can be found by going to

The Home Affordable Refinance modification portion of the program helps homeowners that have lost value in their home, but are still current on their mortgage payments. It gives borrowers with conforming [/spin]mortgages|loans|notes|mortgage notes|home loans[/spin] backed by Freddie Mac and Fannie Mae the ability to refinance their homes with little or no equity. Those that could not refinance their mortgage into a lower interest rate loan, because they lacked the necessary equity, may now be able to receive a loan for up to 105% of their home’s market value.

The Homes Affordable modification portion of this program provides incentives to lenders in exchange for modifying home loans into payments that match 31% of the borrower’s monthly gross income. It is designed to curb millions of foreclosures for families that are struggling to meet financial commitments and on the verge of foreclosure. Hopefully this will be a long term solution to the landslide of foreclosures and not just a temporary ‘stay’, resulting in yet another financial/real estate upheaval later on down the line. Stabilizing home owners financially is looked upon as one of the major ‘trunks’ to getting the country – and its citizens -, economically stable yet again.

It’s not clear what every bank is doing to modify mortgages. JP Morgan Chase has publicly stated that they are not modifying the principal of any mortgages; instead, they are lowering interest rates for a period of 5-years. After the 5-year period, the interest rates will increase to current levels. Chase estimated that they alone would loan mod the interest rates on over 600,000 mortgages and that the number may end up closer to 1 million. The hope is that those 600,000 homeowners will not be in the same situation again in 5 years. Loan modifications are hopefully setting our economy up for long-term stability and not simply another round of ARMs.

Thursday, July 9, 2009

Do You Have Inquiries About Foreclosure Modifications?

A attorney mortgage modification is a permanent change in one or more of the terms of a homeowner's note that allows the note to be modified with new terms, and results in a payment the homeowner can afford. It is not a refinance and does not require a certain credit score as they are not taken into consideration.

In utilizing the attorney mortgage modification option to bring an loan current, can the bank include all fees?

Legal fees may be capitalized into the modified mortgage balance.

May a servicer perform an appraisal of the property if they have concerns about property condition?

Yes, the mortgage company may conduct any review it deems necessary to verify that the property has no physical conditions which adversely impact the lender's continued ability to support the modified loan payment.

Can a mortgage company include late charges in the Foreclosure Re-workings?

Accrued late charges should be waived by the lender at the time of the Loan Workouts and for the most part are. There are rare occasions that the lender would add them onto the principal balance.

When utilizing a Loan Re-workings option, can a FHA lender capitalize an escrow advance for Homeowner's Association fees?

servicer must also escrow funds for those items which, if not paid, would create liens on the property positioned ahead of the FHA-insured mortgage. It actually does not matter whether it is FHA or Conventional when modifying a loan as all Mortgage Workouts require an escrow account no matter what the situation.

Is there a new basis interest rate which loan holder may assess when completing a Loan Modifications?

The new FHA basis interest rate is 200 points above the monthly average yield on U.S. Treasury Securities, adjusted to a constant maturity of 10 years.

Are bank required to perform an escrow analysis when completing a Loan Re-workings?

Yes, bank are to perform a retroactive escrow analysis at the time of the Mortgage Re-workings to ensure that the delinquent payments being capitalized reflect the actual escrow requirements required for those months capitalized.

Can a bank qualify an asset for the Loan Modification option when the homeowner is unemployed, the spouse is employed, but the spouse name is not on the mortgage?

Based upon this scenario, the mortgage company should conduct a financial review of all household income and expenses to determine if surplus income is sufficient to meet the new Loan Re-workings payment, but insufficient to pay back the arrearage. As long as there is surplus based on the banks requirements there is no problem to modify the loan. It does not matter who is or is not on the mortgage, it is all based on who lives in the house.

Monday, July 6, 2009

A Big Foreclosure Moratorium To Increase Loan Workouts

The california attorney loan modification Prevention Act, signed by Gov. Schwarzenegger, adds 90 days onto the time period between when homeowners defaulting on a note and when their home can be repossessed in foreclosure. Banks can avoid the 90-day holdup by having a comprehensive program in place to make mortgage more affordable by reducing the interest rate. Such programs must be approved by regulators.

The goal is to compel Banks to do systematic loan modification across California to reduce the foreclosure rate. California’s save my home rate is said to be the highest in the nation. Of course we have all read the stories of even seemingly rich celebrities losing their multi-million dollar mansions to foreclosure in recent months. The slowing down and stopping of foreclosures is seen in large part as the path back to economical stability in many states.

In the past few months, 15 lenders have agreed to implement the Obama plan, according to the Web site Government spokespersons have said that about 100,000 homeowners nationwide have been sent offers for trial modifications, a relatively modest number compared with the administration's goal of helping 3 million to 4 million homeowners to avoid foreclosure.

In California, the Department of Corporations will determine whether banks qualify for an exemption from the moratorium. About a dozen mortgage companies had applied as of last week, said department spokesperson Mark Leyes; they will now have a 30-day grace period while their applications are reviewed. A list of the participating banks will be posted on

The department will monitor the Banks success rate regularly, to make sure that they have a program in place. Still, there is no guarantee in the law that anyone is going to get a loan workout. The hope is that will make a good-faith effort to make loans affordable and sustainable for homeowners. It is also the hope that homeowners in turn will be able to keep up with their new mortgage payments without undue financial strain. This in turn, will result in homeowners again feeling comfortable to start spending their money and pouring it back into the economy.

The California law, like the Obama plan, says that can determine whether a foreclosure or a loan workout is more cost-effective and can pick the cheaper option.

You can visit to learn more about the laws and get free tips on how to succeed at your loan modification. If you want to get an immediate responce from an attorney backed loan modification firm based out of california please feel free to use the quick application that can be found at where you can do a secure online inquiry that will be followed up on within one hour by a professional.