Loan Modification

Real Estate Loan Modification

In the 2nd quarter of 2008 President Bush signed into law an aid package to help out the flailing mortgage banking system. There are federal monies available to lenders who are helping their struggling customers stay in their homes by changing the terms of their existing loan to make the loan more affordable. Would banks lose money on these deals by lowering their rates? Yes, but the federal government aid package will help the bank absorb part of the loss, and thus create foreclosure solutions.

What is a loan modification?

It is a program where the terms of your existing loan are modified without having to refinance your existing real estate loan. It is fast becoming the method of choice to keep borrowers in their homes. The real estate loan modification takes the past due payments, if any, and adds them back to the end of your loan, and reamortizes the balance at a new interest rate determined by the lender, that makes your payment much more affordable. Your new payment is based on what your current income can afford, not an aribitrary payment. A real estate loan modification is a win-win for the borrower and lender. The lender doesn't have to pay for attorney fees when foreclosing, nor Realtor fees when they sell the property, no taking chances on an unhappy borrower trashing the place to cause further losses, and the borrower continues to make monthly payments instead of an empty asset sitting month after month making no interest income for the bank.

Do I qualify for a real estate rate modification?

There are a few qualifiers to the real estate loan modification. You have to be employed, you have to want to stay in your home, are a few conditions. You must also submit a package to the lender that may include your paystubs, tax returns, bank statements, statements for all your utilities, and possibly an appraisal paid out of your pocket. Each modification is truly a case by case decision and each is judged independantly by the lender.

The loan modification process, starts with a phone call. Either the borrower, or someone representing the borrower will initiate a phone call to the lender loss mitigation department. This department can be called the asset management department, the collection department, the loan work out department as well as many other names.

Once you reach the correct department that handles real estate loan modifications, you will have to go thru a qualifiying process. Part of the process to obtain a rate modification, is that you have to prove that there is a hardship. The hardship is in the form of a written letter you submit advising the lender on why you can't make your current monthly payments. Loss of income, an unexpected increase in your monthly payment, family death or illness or some of the more common reasons. Click here or call me today at 805-276-1942 or go to my website, www.fsbosinsocal.com and fill in a few blanks and I'll call or e-mail you within 24 hours to go over your situation.

Can I qualify for a modification if my home is in foreclosure?

If you are in foreclosure, a rate modification is still available, although time is of the essence so you must act fast. As long as you don't have a sale date established by the lender attorney, you may still have time to qualify. If you owe more than your house is worth, that is o.k. you can still qualify. If you have a negative amortized loan and your minimum payment has disappeared and your payment has doubled, you can still qualify for a real estate modification which would create a foreclosure solution.

Who should negotiate the interest rate modification?

I recently negotiated a rate modification, without the use of an attorney, for my sister and it took over 100 days to get it done with over 20 hours of phone time and gathering of information. The lender dropped the ball over and over again. Getting nasty with them got me nowhere. If you are not an attorney, this process can take quite a while. You can go through the www.hopenow.com website, and it's free. The federal government will pay for the transaction. However, keep in mind if you need it done fast, you should use a service that uses an attorney.

I am an approved agent for AMM, American Mortgage Modification, and we use specific attorneys trained to negotiate rate modifications with lenders. These specific attorneys already have contacts for most of the large lenders and the lenders jump through hoops for them to get it done fast. The reason why they act quicker for our specific attorneys, is that there is certain paperwork requested from the lender such as your initial Good Faith Estimate of Costs, Truth in Lending, and your original Real Estate Loan Application and Note. Most lenders do not have matching signature dates for these documents and are therefore out of complaince.

The AMM specific attorneys will hold them accountable, which sets the tone for the real estate rate modification negotiation process. If the lender doesn't want to do the real estate loan modification presented to them by the attorney, than they face legal ramifications for being out of compliance on their loan documents. In short, the attorney has the advantage, the sharp teeth, leverage, and the lenders attention.

Our AMM attorneys also have a 96% success rate in getting our real estate rate modifications approved.

If you are going to attempt to negotiate your own real estate loan modification or use H.O.P.E. NOW, keep in mind that you need to know what to say to the lender and how to say it. You will spend many many hours on the phone with the lender negotiating and going over the same things over and over, and you must be available to speak with the lender at their beck and call. They are working on thousands of modification files and when your name comes up in their queue, you must be available. You will play endless phone tag if you can't pick up the phone.

Some things you say may back you into a corner and put your modification approval chances at risk as well. Keep a level head when speaking with the lender. If you make a negative statement about not wanting your home anymore out of frustration, your modification chances are nill. One of the main things the lender wants to make sure of, is that you want to make sure you want to keep your home.

The H.O.P.E NOW representives do not have the same success rate as AMM's attorneys, and the process will definately take longer. Also H.O.P.E. NOW may start the process, but they than hand the ball back to you to communicate with the lender, so you will have to be ready to invest alot of your energy and time and your patience will be put to the test. H.O.P.E. NOW counselors are debt advisors, simalar to consumer credit counselors. They are not aggressive since they are paid the same amount of money whether or not your modification gets approved or not. Call me today at 805-276-1942 to discuss a rate modification, or go to my website, www.fsbosinsocal.com, click here to fill in a few brief blanks click send, and I'll e-mail you or call you within 24 hours to discuss your situation.

How Much Does it Cost for a Real Estate Rate Modification?

The lender will not forgive any portion of their balance or fees due. All late charges on any loan(s) must be paid upfront prior to your real estate rate modification new payment taking affect. Also if your home is in foreclosure, you must pay for the lender foreclosure attorney out of pocket as well, usually $2500-$5,000.

Our AMM fee must be paid upfront as well. Our fee varies on the modification being submitted. I've heard some people say that they can't afford to modify. You can't afford not to modify! Bringing a delinquent loan current, means you have to pay all delinquent payments, past due late charges, lender attorney fees, plus past due interest in one lump sum.

The amount to bring a delinquent loan current or out of foreclosure is staggering. This is why when most people go into foreclosure, they aren't able to get out of foreclosure. They lose their home. Getting a real estate loan today with less than 20% equity and a 720 credit score is extremely difficult, so the funds to bring your loan current will have to be out of pocket.

The costs for the modification and the amount you may have to contribute to your lender for past due fees, is far less than bringing a loan current.

A real estate rate modification payment is based on an actual payment you can afford based off of your income documentation you submitted to the attorney/lender. The payment can stay fixed for 5,10,15 or 30 years depending on what the lender grants. Click here or call me today at 805-276-1942 or go to my website, www.fsbosinsocal.com and click on the loan modification request questionnaire, and fill in a few blanks (it's brief) and we can discuss your options on getting you a payment you can afford and keep you in your home.

I look forward to speaking with you and nothing would make me happier than helping you stay in your home!

Sincerely,

Kevin Walton

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