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Are Loan Modification Success Stories Increasing or Decreasing?

At Loan Modification Advocates, we have seen a steady increase in our ability to push loan modifications through to success.  The Treasury Department recently came out with statistics that showed more than 299,000 homeowners received permanent loan modifications as of last month. That equates to around 25% of the 1.2 million homeowners who started the program since March 2009.  Without further information, one can perceive this news as either positive or negative.

From our experience, this number is just too low, and the time it takes to complete a loan modification is still shocking.  Clearly, there is not enough being done by the lenders to expedite the process of loan modifications. However, at Loan Modification Advocates, we are doing everything in our power to put you, the homeowner, in the best particular situation to obtain a loan modification.

When you become a client of Loan Modification Advocates, we perform a detailed analysis on your particular situation.  Our goal is to determine your likelihood of obtaining a loan modification based on our experience with past clients and our knowledge of the guidelines established by the lenders for determining whether a homeowner “qualifies” for a loan modification. Before turning in your file, we work with you to execute a strategy that maximizes the completeness of your file.  Once we believe your file is in the best shape possible, the file is turned in. One would assume that submitting a well-analyzed and guideline-specific file would result in a fast and efficient turnaround by the lender.  Unfortunately, in some situations that is not the case.

Here are some of the scenarios Read more

Foreclosure or Short Sale Complete? Think Again.

At Loan Mitigation Advocates we take pride in trying to help our clients preserve their home ownership.  Loan modification is the preferred method to resolving a homeowner’s hardship.  However, there are times when someone’s situation cannot be resolved through loan modification and the only possible solution may be to short sale or foreclose on the property.

Short sales and foreclosures are happening due to the combination of falling home prices and a borrower’s unforeseen circumstances (ie unemployment, reduction of hours, medical condition, etc,). Borrowers who can’t obtain a loan modification and are having difficulty maintaining their payments have to sell their homes for what they owe. As a result, they are being forced to short sell or foreclose.  Unfortunately, these homeowners who head down the path of short sale or foreclosure are unfamiliar with the pitfalls that may follow.  Besides credit implications, possible deficiency judgments could occur long after the homeowner has concluded their transaction.

In a recent article, Les Christie describes two scenarios where homeowners were forced into involuntary homeowner monetary contributions after the completion of their transaction – one related to short sales and the other related to foreclosure. We recommend that you read this entire article by clicking on the link above to further understand these potential consequences. 

Also, to get further educated on your particular situation you can contact Greg Jewell at 925.463.6164.  Greg specializes in short sale coordination and has direct experience with numerous short sale transactions.  Contacting a real estate attorney, bankruptcy attorney or a tax consultant is also important to clearly understand the types of loans you have – recourse vs. non-recourse and the possible implications involved.

Mortgage Industry to Receive Pressure from the Obama Administration

The government is not happy with the results from its foreclosure-prevention efforts.  Mortgage companies are not doing enough to help homeowners avoid losing their homes.  The Obama administration has vowed to spend the next several weeks to increase the pressure on the mortgage industry.

In a recent Associated Press article on this matter, Treasury Department officials said they will step up pressure on all the companies participating in the government’s $75 billion effort to stem the foreclosure crisis. At Loan Mitigation Advocates, we feel that it is about time. Despite having completed numerous successful loan modifications, we have been frustrated at the inability of lenders to turn around loan modifications in an effective and efficient manner.  Unfortunately, we don’t see this changing unless the lenders are more heavily scrutinized for their lack of effort and thus held accountable with direct consequences.

To turn the lenders around, it appears the government will start by sending a three person team to monitor the eight largest companies’ work and then that team will send twice-daily reports on their progress. Also, the Treasury Department will publish a list of the mortgage companies that are lagging.

“In our judgment, servicers to date have not done a good enough job” of making the modifications permanent, said Michael Barr, an assistant Treasury secretary. Companies, he said, “that don’t meet their obligations under the program are going to suffer consequences.”

Focus your attention on CREDIT

Credit has been making headlines recently and is quite a serious subject.  With many homes turning to short sales and foreclosures, some homeowners don’t realize the huge impact that a short sale or foreclosure can have on their credit and subsequently their future buying power.

In a recent article by Strategic Equity, Dave Muti, author of “Mortgages:  What You Need to Know,” was asked how a credit score is calculated and tips for increasing it. The Fair Isaac Corporation created the most common credit score used today – the FICO score.  It ranges between 350 and 850.  The higher the score, the better the interest rate you can secure.  720 is the credit score threshold that you don’t want to drop below in order to secure the best rates.  If you drop below 500, you may not even be able to secure a mortgage.

The following are five critical credit criteria reported in the article:

1. Payment History – This pertains to your track record for paying your bills. It makes up 35% of your score. Essentially, this means paying your bills on time. A mortgage “late” is much more serious than a credit card “late”
2. Credit Ratio – How much you owe is 30% of your score. Just because you owe less does not translate to having a better score.  This score is determined between the various types of credit you have opened (see #3 below). There needs to be a balance between how much you owe and how much you have available to you.  Having too many credit cards can be a negative and having only one could be as well. The goal is to have a lot of credit available to you, and to then use that credit, while at the same time not maintaining a high balance.
3. Credit Type – The type of accounts you have makes up Read more

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 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

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.

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