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Why Getting a Loan Modification May Not be a Speedy Process

A great new article was just written from CNNMoney explaining some of the reasons why troubled homeowners are not getting mortgage modifications. Many of you will find the items discussed below to be absurd and ridiculous. These are some of the pitfalls we face everyday, here at Loan Mitigation Advocates, when trying to help our clients get a loan modification granted by the lender.

The top Five Reasons for why the loan modification process is slow are a byproduct of the lenders’ inability to get ahead of the shear volume of loan modification requests.  Essentially, they are always playing catch up and here are 5 reasons adding to this deficiency (see the more defined list at CNNMoney):

#1 – The Fax Machine
Everything from lost pages to warped pages to no acknowledgement that the fax has been received to incorrect fax numbers.

#2 – Multiple Forms
Seemingly endless amounts of documentation are required for a loan modification.  To compound the issue, each lender has its own set of requirements and each borrower’s situation is different which demands a different set of requirements.

#3 – Outdated Information
The time it takes to process a loan modification could be weeks to months.  Information gets outdated and lenders want to make sure that your situation does not change during the time they are considering granting you a loan modification.  In many instances, they will ask for updated information two or three times (i.e., pay stubs, bank statements, etc.)

#4 – Poorly Trained Personnel
I can tell you first hand that there are some people working for the lenders that are rude and unable to assist.  Most of the time, these individuals do not acknowledge receipt of the initial loan modification packet and if you are calling to obtain a status, they have no history of where the loan modification is in the process. You would assume that all individuals working in the loan modification department would be able to obtain a current status on a borrower’s file.  Not the Read more

Obtaining a Second Loan Modification – is this Possible?

This is a common question that we field here at Loan Mitigation Advocates from prospective clients. These calls typically come from borrowers who went through the loan modification process with another modification company or used the lender directly and had insignificant results.  In most cases, these borrowers were unhappy with the result of the granted modification.  The modifications created little to no impact on their monthly payment and in some cases raised the monthly payment. We do receive a smaller percentage of calls that come from individuals who received just an adequate modification.  However, since the time of the granted modification these individuals have fallen under more dire circumstances and need a further reduction to take place.

The bottom line answer to the question of whether another loan modification is possible is that it depends.  All loan modification agreements are not created equal.  They are different and the need to thoroughly understand your contract is critical. Primarily, you are looking for any verbage that restricts your ability to obtain another loan modification.  If there appears to be nothing in writing within the contract, the next step is to contact the lender directly to see if they have any internal policy that prohibits a second loan modification within a certain period of time.  If a restriction exists, the period of time that needs to elapse before another modification can be granted is typically around 1 year.

At Loan Mitigation Advocates, we do not accept advanced fees and we would be happy to look into this situation for you. We are focused on working with the lender to obtain a long-term solution that benefits you, the borrower.  The mediocre quick fix or a temporary band-aid for your financial situation is not what we are after.  As an operating goal at Loan Mitigation Advocates, we seek to secure a loan modification for our clients that is impactful enough to alleviate the need for a second modification down the road.

Mortgage Rate Update Ending 07/01/09

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: 5.7 percent
• 30 Year Fixed Rate Jumbo: 6.91 percent
• 15 Year Fixed Rate: 5.07 percent
• 5/1 ARM (Adjustable): 5.17 percent
• 1 Year ARM (Adjustable): 5.17 percent 

Additional news centered around the government’s plan to expand the number of people who will be eligible for mortgage refinancing.  Under the Making Home Affordable plan, homeowners will now be allowed to refinance for up to 125 percent of their homes’ values (previously set at 105 percent of value).

Mortgage Modifications Get Trial Period

There is an interesting new twist to the whole loan modification procedure.  Mortgage modifications may require a three-month trial period in order to test the borrower’s ability to make payments under the modified loan structure.  If the borrower meets the requirements during this trial period then the loan modification will be finalized. During the trial period a loan could be reported as delinquent and in most cases the foreclosure process will be suspended.

For the most part, this trial period is specific only to the federal government’s Home Affordable Modification program.  However, expect modification programs that fall outside of the federal government’s program to implement the trial period as well.

In a recent article by Marcie Geffner of Bankrate.com, she describes 10 things that a borrower needs to know about the trial period. To read more about those ten items, please click on this link, Modifying Mortgage Trial Period

Obama Plan for Modifying Mortgages Has Slow Start

According to a recent NY Times article, about 55,000 homeowners have been extended loan modification offers after two months of the Obama loan modification program going into effect.  This is not an encouraging number. Under the Obama plan, the goal is to lower monthly payments to 31 percent of the borrower’s gross income. This will occur first by reducing interest rates to as low as 2 percent.  If the interest rate reduction is not sufficient to hit the 31 percent level, extending the loan term or deferring principal will be another option.

At Loan Mitigation Advocates, we have direct interaction with numerous lenders and we can concur that the U.S. plan for modifying mortgages has started very slowly.  One reason we see as the cause of the slow start is that many lenders are still in the process of revamping their computer systems and altering their process in order to accommodate the new rules and regulations.  Prior to the new regulations, lenders already had a significant backlog of files needing to be processed.  The new rules have just compounded the issue.

Another cause to the processing delays is that some lenders do not have their different departments effectively broken out. We have interacted with lenders who in some cases have their foreclosure, short sale and loan modification departments flowing to the same location.

However, the NY Times article discusses that experts feel a larger issue is the continuing deterioration of the economy. The longer it takes to get the program in gear, they say, the fewer people may qualify for modifications. The expected rise in unemployment and the ending moratorium on foreclosures may directly keep a number of homeowners out of the program.

On a positive note, the article does mention that the administration remains confident that the program will Read more

Mortgage Rate Update Ending 05/06/09

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: 5.27 percent
• 30 Year Fixed Rate Jumbo: 6.68 percent
• 15 Year Fixed Rate: 4.78 percent
• 5/1 ARM (Adjustable): 5.07 percent
• 1 Year ARM (Adjustable): 5 percent 

Mortgage application activity rose slightly for the week ending May 1 according to the Mortgage Bankers Association. Refinancing activity edged up 1.2 percent while applications for new purchase rose 5 percent. Pending home sales for March rose 3.2 percent, according the National Association of Realtors.

Have We Reached the Floor in Housing?

The recent uptick in real estate activity has really started to bring out the optimists.  I follow CNBC, the NY Times, and the FOX news organizations fairly regularly.  It hasn’t been until recently that I started to see stories with a positive tone regarding the housing market or the economy.  Who knows, maybe it’s that spring is here and flowers are blooming outside and better weather is upon us.  Needless to say, the recent rash of positive stories started to get me thinking of whether we actually might be at or approaching the bottom of the market. 

As I thought more about this possibility, I jotted down reasons for why people are considering this to be the bottom.  Here is what I came up with:

• Inventory numbers are decreasing
• Open houses are bustling with more potential buyers
• Properties are spending less time on the market
• Interest rates are at historical lows

These are all good signs.  Unfortunately, there are two things that are holding us back from becoming a true believer – foreclosures and short sales.  There appears to be some misleading information out there that the number of short sales and foreclosures coming on the market have slowed considerably.

One site, Trulia offers to explain this information. Trulia recently reported that despite the large volume of foreclosures (see the list below), there has been a significant drop in the number of foreclosure properties coming on the market in some states.

1.  Las Vegas, NV (31,983)
2. Phoenix, AZ (19,075)
3. Chicago, IL (16,038)
4. Los Angeles, CA (9,913)
5. Sacramento, CA (9,346)
6. San Diego, CA (7,668)
7. North Las Vegas, NV (6,852)
8. Bakersfield, CA (6,744)
9. Miami, FL (6,699)
10. Tampa, FL (6,487)
11. Indianapolis, IN (6,377)
12. Stockton, CA (5,924)
13. Atlanta, GA (5,859)
14. Orlando, FL (5,855)
15. San Jose, CA (5,802)

 What is the central cause of the drop?

According to the Trulia article, a number of states are Read more

Loan Modification Testimonial

“Loan Mitigation Advocates diligently worked to keep my family in our home, preserve my credit and obtain a modified mortgage payment we could afford. More importantly, meeting and working with Greg, one of the co-founders, has restored my faith in people and made me believe that there are good people in this world that can be trusted. Loan Mitigation Advocates is an example for other businesses in their industry to emulate; they truly believe and honor the code of putting their client’s best interest first.”

- Samantha

Loan Modifications get a Boost from the Stimulus Plan

A new plan has been hatched making loan modifications easier for struggling homeowners to obtain and lenders/servicers to provide.

Here are some of the details of the plan:

• Loans originated on or before January 1, 2009 are eligible
• First-lien loans on owner occupied properties where the unpaid principal balance is equal or less than $729,750 qualify
• Full documentation must be provided by all borrowers (including but not limited to income, pay stubs, most recent tax return and affidavit of financial hardship)
• An IRS 4506-T (Request for Transcript of Tax Return) form must be signed
• Property owner occupancy status will be verified via a credit report and other documentation
• Incentives will be offered to lenders and servicers to modify at risk borrowers who are current on payments
• Loans can only be modified once under the program
• The program will run through December 31, 2012          
• Servicers will follow a specified sequence of steps in order to reduce the monthly payment to no more than 31% of gross monthly income
• Modification sequence first requires reducing the interest rate then if necessary extending the term or amortization of the loan up to 40 years.

If you are interested in discussing any of these items or to obtain a better understanding of how the plan may help you, feel free to contact Loan Mitigation Advocates directly.

Mortgage Rate Update Ending 02/25/09

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: 5.41 percent
• 30 Year Fixed Rate Jumbo: 6.87 percent
• 15 Year Fixed Rate: 4.93 percent
• 5/1 ARM (Adjustable): 5.4 percent
• 1 Year ARM (Adjustable): 5.58 percent 

Mortgage loan application and refinancing activity fell,  while applications for new purchases dropped 2.6 percent. Home prices fell 18.2 percent in the final quarter of 2008.  This is compared with the same period a year earlier.

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