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Walking a Tightrope? Some Modified Mortgages Move toward Delinquency

No one said it was a perfect solution. It is not a surprise to hear that just over 50% of the modifications made in the first half of 2008 were already at least two months delinquent again, according to a report by the U.S. Comptroller of the Currency (OCC). However, the justification for why these delinquencies are reemerging may not be apparent to the casual observer.

At Loan Mitigation Advocates, we believe the following reasons have contributed to the high percentage of second time delinquencies.  First off, many of the modifications performed were on mortgages with adjustable rates. The borrowers attached to these adjustable rate mortgages were already having difficulty making their existing payment. Compounding the issue is that these adjustable rates were scheduled to reset at a higher rate, thus increasing the total monthly payment due. Unfortunately, the modification solution for many of these mortgages was to freeze the rate at the original interest rate.  Essentially, the modification had little or no impact and only delayed the problem.

A second component leading to the repeat of delinquencies involves forbearance and repayment plans.  Basically, these two options allow a homeowner to delay payment of their mortgage and catch-up on their payment schedule for a certain time period. Under certain circumstances, these two options may be viable for many people.  However, the central problem with forbearance and repayment plans is that the mortgage payment that is not made during the agreed upon time period is typically Read more

Mortgage Rate Update Ending 12/15/08

Bankrate.com  conducts a weekly national survey on the interest rates for the five most common consumer banking products.  Here’s this week’s outcome:

• 30 Year Fixed Rate: 5.80 percent with points averaging: 0.35
• 30 Year Fixed Rate Jumbo: 7.37 percent
• 15 Year Fixed Rate: 5.51 percent
• 5/1 ARM (Adjustable): 6.17 percent
• 1 Year ARM (Adjustable): 6.09 percent 

Fixed-rate mortgages continued to fall this week.  They have dropped to their lowest point since February. After a massive 112.1 percent increase the week before, the overall mortgage activity fell at the end of November, according to the Mortgage Bankers Association.

Why the Housing Market Will Recover in the Near Future

Today, we at Loan Mitigation Advocates are going to give you hope. Well, at least after you read this blog you may see a potential glimmer. This is the second part in a series reporting on opposing views of the direction of the housing market.  Our previous blog identified various reasons ‘Why the Housing Market Will Not Recover in the Near Future.’ This piece will focus on the support for a turn around in the market.

Here are five reasons why the housing market will show new life in the near future:

• Impact of Loan Mitigation and in particular, Loan Modifications
• Government Intervention
• Home Prices are Falling at a Slower Rate
• Pending Home Sales Recently Increased
• Website Traffic Has Increased

Impact of Loan Mitigation and in particular, Loan Modifications
This is becoming a viable option for many people who are faced with a hardship and consequently the possibility of losing their home.  One component of loan mitigation involves the step by step process of where a homeowner or a third party loan mitigator attempts to negotiate a modification to the existing loan. This is a very time consuming process and can take months to complete.  However, more and more banks are realizing the importance and cost effectiveness of loan mitigation. By keeping people in their homes, this will minimize the amount of short sales and foreclosures set to come on to the market and, at the same time, will limit the amount of write-offs that the bank will have to take. At Loan Mitigation Advocates, we have helped numerous individuals modify their loans and stay in their homes.  We will spend time with you assessing your situation and help you determine if you are a good candidate for a loan modification. If you need to discuss your current situation, feel free to call our 800 number or email us directly.

Government Intervention
Potentially the biggest X factor in the group.  It is truly an unknown in terms of Read more