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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

Why the Housing Market Will Not Recover in the Near Future

Today, we here at Loan Mitigation Advocates are going to play the Devil’s Advocate.  This is the first part in a blog series reporting on opposing views of the direction of the housing market.  Our next post will discuss ‘Why the Housing Market Will Recover in the Near Future’.

Here are five reasons why the housing market is in for a long recovery period:

• Restricted Credit
• Home Sale Prices are Less than the Amount Owed by Sellers
• Number of Defaulting Prime Mortgages
• Number of Homes Currently on the Market
• Additional Rounds of Adjustable Rate Mortgages are Scheduled to Reset

Each one of these reasons is damaging to a housing market in itself.  However, when combined, we could be in for a much longer road to recovery than some think.

Restricted Credit
One component that has played a role in a slower housing recovery is the ever-changing lending world.  Lending standards have been tightening over the last few months and a tightening effect will make it more difficult for new borrowers to find loans.  The result will be less demand for homes and, in turn, inventory may increase.

Home Sale Prices Are Less that the Amount Owed by Sellers
More homeowners than ever are selling at a loss. Zillow.com reports that nearly 25% of all homes sold nationwide (in the last year) sold for less than sellers originally paid. Homeowners are walking away with less in their pocket when Read more

Mortgage Rate Update Ending 11/20/08

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: 6.33 percent with points averaging: 0.37
• 30 Year Fixed Rate Jumbo: 7.62 percent
• 15 Year Fixed Rate: 6.01 percent
• 5/1 ARM (Adjustable): 6.18 percent
• 1 Year ARM (Adjustable): 5.78 percent 

Mortgage rates continued their downward trend. In particular, adjustable-rate mortgages showed the greatest drop. Depite the drop in interest rates, mortgage loan activity declined by 6.2 percent for the week ending Nov. 14, according to the Mortgage Bankers Association.

According to the National Association of Realtors, U.S. home median prices declined by a record 9 percent during the third quarter when compared to the same period in 2007.

The Most “Underwater” Town in America is…

Mountain House, California. Interestingly, Loan Mitigation Advocates happens to be located only 25 minutes from this town. This news is so big that even the NY Times carried a recent story on the unfortunate circumstances facing Mountain House residents. The article states that close to 90 percent of Mountain House homeowners owe more on their mortgages than their houses are worth. This is the highest percentage in the country.

Mountain House is clearly a microcosm of this widespread problem. Many families located in this area and people across the nation are adjusting their spending habits due to the depressing economy and the burden of paying a high mortgage.

“Most people pay very little attention to what their equity stake is if they can make the mortgage,” said First American CoreLogic’s chief economist, Mark Fleming. “They think it’s a bummer if the value has gone down, but they are rooted in their house. When my house is valued at 50 percent less than it was, does this begin to challenge the way I’m going to behave?”

If Mountain House and the impact on the surrounding area are any indication, the answer is Read more

Who is Next in the Quest to Avoid Foreclosures?

JPMorgan Chase & Co is the latest bank to expand its loan modification program. The program will look to assist as many as 400,000 customers in an effort to avoid foreclosures that could reach $70 billion in defaulted loans.

Charlie Scharf, JPMorgan’s chief executive of retail financial services, discussed that the modifications at JPMorgan will range from reducing rates to extending terms to completely replacing products. Modification options will be given to customers based on their current product and needs.

One of the biggest stumbling blocks JPMorgan has found in trying to modify loans is actually getting in touch with customers, Scharf added. It has been our experience at Loan Mitigation Advocates that large banks, like JP Morgan, are currently unequipped to handle the shear volume of inquiries from people in dire financial predicaments. This is exactly where Loan Mitigation Advocates can be of service. We have numerous contacts deep within the banking industry and a proven process to expedite the loan modification process.

Buyers and Sellers face a Juggling Act in this Real Estate Market

The most common question out in the real estate community is “When are we going to see this market turn-around?”  Good question.

At Loan Mitigation Advocates, we monitor the various media sources and do diligent research daily.  The flip-flopping of opinions that occurs on this issue is prevalent.  One day, reports claim that the market is doomed for the next few years, and the following day information appears that indicates a recovery will ensue.  The bottom line is that there are too many dynamic factors to make a case for either side at this time.

Our prediction unease is market-dependent and well-founded.  No one does have a crystal ball.  Especially not now.  In our opinion, there are too many other kinds of balls up in the air.  Government intervention. Interest rates.  Bank takeovers. Consumer confidence.  The jobless rate.  The presidential election.  Too many balls in the air.

If you are now considering selling and/or purchasing a home, don’t get caught up in only what the media is saying.  Your primary focus should be Read more

Mortgage Rate Update Ending 10/17/08

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: 6.74 percent with points averaging: 0.42
• 30 Year Fixed Rate Jumbo: 7.87 percent
• 15 Year Fixed Rate: 6.4 percent
• 5/1 ARM (Adjustable): 6.61 percent
• 1 Year ARM (Adjustable): 6.32 percent 

Mortgage rates exploded this week due to the lingering uncertainty with Washington’s bailout plan. Mortgage activity was up for the second straight week, according to the Mortgage Bankers Association.

Refinancing activity was up 12.5 percent, while applications for new purchases fell by 0.3 percent.

Borrowers Face Uphill Battle on Loan Modifications

Are you one of the numerous borrowers who have attempted to contact your lender about a loan modification, only to feel like you’re facing a dead end after investing your time, energy and good will?  Well, you are not alone.

The story of Bernie Kellman is a primary example of the numerous borrowers who have unsuccessfully obtained loan modifications after several attempts. Recently, a Contra Costa Times article discussed Mr. Kellman’s situation and the brick wall that borrowers can encounter when pursuing a loan workout.

The chart below breaks out loan modifications by type.  This information comes from the California Department of Corporations:

Please keep in mind; at Loan Mitigation Advocates we are here to support the consumer.  We encourage you to attempt a loan modification on your own; however if you feel the need to pursue our services, we are happy to help navigate and guide your modification process.

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