Mortgage Companies are steping up their Loan Modification Efforts

These are your lenders choices and options:

•  Loan modification 
•  Foreclosure
•  Forbearance
•  Deed in lieu
• ·Short sale approval

Offering a loan modification is usually the best option for lenders, because they avoid the high cost of foreclosure (by some estimates $50,000 to $100,000 per foreclosure) and they continue to collect interest on the loan – at a lower rate of return, but still more than enough to earn a profit.

So, If you one of the many Americans underwater, These two words may save you yet:

 LOAN MODIFICATION.

Why many are taking this Option

The better option is to find a way to stay in your house- by first, seeing if your lender is willing to reconstruct your mortgage loan, maybe even forgo a couple of monthly payments to help you get back on your feet.

Why Lenders are taking this Option
More lenders are now willing to make this accommodation to avoid taking the property back. Banks hate to take over homes, especially in a declining market so they are wiling to make concessions.

Incentives

An extension of the Home Affordable Modification Program implemented in May, it is anticipated that expanding incentives will increase the use of modifications among eligible homeowners from the rather dismal 12 percent currently in place, to somewhere closer to the actual number of homeowners eligible for assistance.

According to the Treasury Department, $10 Billion dollars of government funds will be dedicated specifically for loan modification programs and applied directly to lenders in order to catch-up payments and offset the cost of completing a short sales process.

Traditional Loan Modification

• A lender adjusts the existing terms and conditions of a mortgage
• Reducing the Interest rate, reducing principal, changing the amortization period, or a combination of the above.
• It is not a Refinance

Is it possible to get your Principal Reduced

• Yes, but less than 2% of modifications include principal reductions
• Can some cases warrant principal reductions? Absolutely, but nothing is guaranteed
• Bottom line, get your loan affordable.

How Long is the Process

After providing the documentation, the lender will review and make a decision on whether to approve or decline the application. At this point, you will begin the negotiation process with our lender. The Mortgage modification process can take from 1 week to over 6 months.

How Do I qualify

• You must establish and show proof of hardship
• Lenders use certain criteria formula to see if you qualify
• Key is to be one step ahead
• Download your step by step guide so you don’t miss the mark

FHA’s Hope for Homeowners Modification Program

• Reduce payments by Modification to loan terms
• Refinancing available to those that have little to no equity
• Reduction as much as $1000 each year for 5 years of your principal
• Program ends December 31, 2012
• Refinancing ends June 2010

Eligibility

Obama’s Foreclosure Prevention Plan is NOT mandatory for all lending banks. However, if your bank/lender accepted the bail out they must participate.

The minimum eligibility criteria for this plan are:

• Borrowers will need to be current with their mortgage payments and have sufficient income to support the new payment.
• The property must be owner occupied.
• The property must have less than 20 percent equity to qualify.
• The first mortgage may not exceed 125 percent of the current market value of the property. So for example if a property is worth $500,000, the borrower must owe no more than $525,000.
• You can use the following calculation: {Property’s current value x 1.25 = MHA refinance eligible limit}
• Loan owned or secured by Fannie or Freddie

Contact the following resources:

Fannie Mae

800-7FANNIE (800-732-6643 / 8am to 8pm EST)

FannieMae.com/homeaffordable

Freddie Mac

800-FREDDIE (800-373-3343 / 8am to 8pm EST)

FreddieMac.com/avoidforeclosure

Second Lien Program

When a government’s Home Affordable Modification’s is initiated on a first lien, servicers participating in the Second Lien Program will automatically reduce payments on the associated second lien according to a pre-set protocol.

Alternatively, servicers will have the option to extinguish the second lien in return for a lump sum payment under a pre-set formula determined by the U.S. Dept. of the Treasury.

Can a Home-Owner do it themselves

Yes, a Home owner can modify his or her own mortgage, but you need to know the right questions to ask and the right answers to expect so be sure tow download the Step-by-Step Guide today.

• Lenders use a specific formula for determining whether you qualify
• Down your Step by Step Guide