Posts Tagged ‘Financial Hardship’

7 Things to Know about Loan Modifications

January 22nd, 2010

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The U.S. President has declared that performing loan modification on distressed mortgages is a key part of keeping families in their homes, and ending the rapid decline of property values.  Critics have said that, in 2008, some 53% of all restructured loans were once again in default by the end of that year, but others say that those loan modifications were poorly executed.

The Obama administration aims to help millions of families avoid foreclosure and stay in their homes through an aggressive loan restructuring program.  Here are the top 7 things homeowners should know about this plan.

1.    The focus of Obama’s loan modification plan is centered around monthly payments – not the long term price of the loan.  The focus is more about keeping families in their homes, and less about helping borrowers get good return on investment.
2.    The end goal of each loan modification is to get the monthly payment on each delinquent mortgage down to 31% of the borrower’s monthly income.  To that end, the government will pitch in up to 7% of family income, and the lender will take steps such as reducing interest rates and extending the loan’s term to 40 years.  
3.    The government will provide cash incentives to both the lender and the borrower, to encourage use of the loan modification program.  Lenders will receive $1,000 per loan modification, plus another $1,000 per loan per year for up to three years.  Borrowers also get a $1,000 discount off the loan’s principal each year for up to five years.  Both of these incentives require the new loan terms to be active for three months, and to be kept current.
4.    This loan modification plan is only for delinquent mortgages for owner-occupied homes which are the primary residence of the owner.  The loan must have an outstanding principal balance. Both occupancy, and financial hardship, must be verified.  Analysts have commented that such measures would have prevented the current crisis if enacted sooner.
5.    Each lender and loan servicer will test each loan using a formula to determine if a loan should be modified.  The formula compares the present rate of repayment, vs. the expected rate of repayment after restructuring.  If the borrower is able to make payments more faithfully on a delinquent mortgage under a modified loan, then this is worth more to the lender, and the loan should be modified.  In tandem with the cash incentives, this will help increase participation.
6.    The Obama administration intends to offer incentives to prevent or remove second liens, but further details on this have not yet been announced.
7.    Real estate speculators need not apply.  The entire focus of this initiative is to keep families in their homes – not to aid small real estate investors.  This is great news for the affected families struggling under a delinquent mortgage, but only time will tell how the real estate market as a whole will benefit from this program.

This loan modification program for delinquent mortgages is now “live” and in effect.  You may have trouble getting the process started with your lending institution, if you live in an area that was hit hard by the recent real estate crash.  Some experts are concerned that lenders don’t have the the capacity to process all the borrowers who will inquire about loan modification.

Krebs Financial of Miami, Florida is a full-service mortgage, credit repair and loss mitigation company with expertise in short sales, loan modifications, reinstatements and more.

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Could I Get Another Loan To Purchase A Foreclosure While I’m Doing A Short Sale On My Original Home?

January 22nd, 2010

A short sale is a term used in real estate where the a home or other property is sold for less than the balance owed on the mortgage.

In the case of a short sale, the lending institution and the debtor agree to terms where the loan balance is discounted and the lender will accept the proceeds from the sale usually, though not always, to fully satisfy the debt. This is done through the lender’s “loss mitigation” department and is done during time of financial hardship on the part of the debtor. This is normally done to prevent a foreclosure, but only if it’s in the lender’s best interest, i.e. it is their best chance of getting the most money back out of the deal.

Natalia Osorio Editor of the “Loan Modification Foreclosure” website — — pointed out;

“…Because a short sale occurs due to financial hardship and it will show up on a credit report as “mortgage debt not paid in full”, it is highly unlikely, though not impossible, that a person could receive a loan to purchase another home. Although it does not typically have the negative impact that a foreclosure or bankruptcy would have, it will still strongly affect a credit score and the ability to qualify for credit, especially another mortgage…”

There is no specific question on the federal loan application referring to short sales, but it will ask about delinquencies, and the debtor will still need to fully disclose to the lending institution all information regarding real estate they own or have owned that would affect their ability to qualify for the current loan being applied for. If the debtor is completely honest about their situation, there is no remaining delinquency from the short sale agreement, and they have a good debt-to-income ratio, it’s possible they may still get approved.

If funding through a conventional lender is not an option, the potential buyer may still have the option of a hard money loan or a loan from a private lender(such as a friend, family member, or other source).

“…A hard money loan is an asset-based loan secured by the value of a property. It is similar to a traditional mortgage, but usually the interest rates and fees are higher, it is provided by a private lender, and will usually only cover up to 70 percent of the market value of the property. The advantage to this type of funding is that credit score is often not a large factor, if at all, and in the case of purchasing a foreclosure home, the 70 percent may cover the entire cost of the home if it’s purchased below market value…” N. Osorio added.

Further information about how to get professional assistance with a mortgage loan modification by

Hector Milla runs his corporate website at where you can see all his articles and press releases.

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Loan Modification Requirements – A Resourceful Guide For a Complex Subject

January 16th, 2010

The new loan modification bill, which has been passed to vote by the US President, has offered hope to thousands of Americans who are burdened with mortgage loans that are continuously ballooning. The new bill offers options that are more malleable and generous; thus, ensuring the approval of more loan modifications than ever. The loan modification requirements are rendering a higher percentage of mortgage holders eligible for modified loan plans.

Qualifying for a modified loan plan requires proof of emergent financial problems. If you have recently lost a job or even had a cut off your monthly pay, you are eligible to a modification plan. Financial hardship should be documented with the appropriate papers that verify the monthly income. The new loan mod plan can secure financial aid to bring down the mortgage payment to less than 30% of the total monthly income of the borrower.

Modification funds are available for personal mortgage loans. In other words, if you live on the property, which you’re paying mortgage for, you’re probably eligible for a modification. Occupancy should be documented with proper bills and other required proofs.

The economic state of the lender is a decisive factor in determination of eligibility of modified loan proposals. A loan mod is an agreement between the lender and the borrower. If a lender has declared bankruptcy, it is legitimate to turn down loan mod proposals. However, the recent loan mod bill has offered incentives to lenders for each completed modified loan; hence, decreasing the overall cost of loan modifications as compared to the cost of foreclosure.

After the lender approves a modified loan plan, he assigns the borrowers to a ‘Trial Period”. The plan is not valid unless the borrower delivers three monthly mortgage payments on time. After the trial period, the plan is considered valid and the borrower would receive a federal incentive for each year of completed payments.

The new loan modification plan has made more Americans eligible for modifying their debts. Recent researches have proved that more than 6 million delinquent loans are the result of a disastrous economic recession. The federal government is offering financing solutions to save mortgage holders from foreclosure.

The economic recession has been passively reflected on the real estate business. Loan modification requirements have created the opportunity for more American to modify their debts. To sum up, financial hardness and occupancy are the two most important factors in eligibility for modified loan.

For detailed facts and essential tips about how you can be approved for a loan modification, visit this simple, easy to understand loan modification guide and resource: Home Loan Modifications.

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Get a 2% Interest Rate with New Mortgage Refinancing Options from Obamas Stimulus

January 14th, 2010

Homeowners all across the country are struggling to find a way to save money, and prevent their home from being lost. In an effort to help, the Obama administration has announced the “Making Home Affordable” plan. This program offers homeowners 2% mortgage interest rates and other benefits through new mortgage refinancing options. Here is how to use this plan for yourself, and get help refinancing a mortgage.

This program is available to millions of people who are suffering financial hardships. These hardships are numerous and can include things like losing a job, reduced income, medical bills, or credit problems. Homeowners with these problems, and a lot more, can easily get help obtaining a better, and affordable, monthly mortgage payment through refinancing with Obamas stimulus.

Some big benefits of refinancing a home loan with President Obamas stimulus plan include:

-Low monthly mortgage payments that are not any more than 31% of a homeowners gross monthly income.

-Easy qualification requirements which make millions of people able to actually get approved for a mortgage refinancing.

-Mortgage interest rates that can be lowered to as little as 2%.

-Home loans can be extended in length, or other terms and conditions may change to lower the monthly home loan payment amount.

Homeowners who want to benefit from this housing stimulus program should contact a mortgage lender or bank and apply. Something that all of them will require though is a “Letter of Financial Hardship” that basically sums up your problems, your potential solutions, and how important saving your home is to you.

This stimulus program will benefit millions of people. However, it will not find you, you must go out there and get help before your situation gets worse. Take action today. Save your home or a whole lot of money through refinancing a home loan with the housing bailout plan from Obama.

I have been underwriting mortgages for years. Recently, I got into a new business but I still wish to share my advice, tips, and industry inside happenings of the mortgage refinancing industry.
For more articles on Mortgage Refinance check out my website

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How to know the difference between a Loan Modification and a Forbearance So You Can Be Sure You Know What You Are Getting From Your Lender.

January 9th, 2010

It is important for you to be aware of the different offers your lender or servicer sends you when you are requesting a loan modification.

Do you know the difference between a loan modification and a forbearance?
This information is important because many times the lender wants to push a forbearance on homeowners when what you are requesting is a loan modification. Stand your ground and if you have to request a supervisor to make sure you are not getting a bandaid when what you need is an operation.
Also make sure you are talking to Loss Mitigation and not the Collection department. Remember they are collectors as they remind you on every call – their job is to try to collect as much as possible and guess what? A forbearance does just that, collects as much as possible. Also, the collection department is trained to collect.
You need to be aware of all the terminology so you are not put in an unexpected situation for lack of understanding.

Here is the definition of both.

Forbearance Agreement – This is an agreement where the borrower agrees to a mortgage workout that pays back the delinquent mortgage payments over a specified time period in addition to the current mortgage payments, it will bring the borrower current on her payments. A forbearance agreement is not a long-term solution when you are delinquent. A forbearance is designed for a borrowers suffering a temporary financial hardship caused by unexpected changes in their life such as loss of income or illness. A forbearance will most likely result in higher payments for several months to pay back all of the past due payments and fees. If you are still suffering a hardship or are in need of a lower mortgage payment then this is not the right option for you.

Loan Modification – An agreement made between a mortgage lender and borrower in which the lender agrees to change one or more terms of the original note. This could be done by either changing or lowering the interest rate, extending the term of the loan from 30 to 40 years for example, changing from adjustable to fixed loan, deferring some of the principal balance or delinquent amount to make the payment more affordable or to avoid any upfront payments of the defaulted amounts – this would usually be interest free due and payable either at the end of the term or time stated, at the time of refinance, or if and when you sell the property or principal forgiveness is when you do not have to payback the principal the lender agrees to reduce from the balance you owe, and you would usually receive a 1099-C as income on this option – check with your CPA if this happens for options.

Once you know the difference you are aware of what each of these options mean so you can make educated choices for your loan modification needs. As you navigate through this complex process it is important to learn as much as you can so that you know what you are getting every step of the way and you can have more control of your process.

For more free loan modification assistance, tips and tools sign up for your free copy of “Dirty Little Loan Modification Secrets, You Must Know” at

“I would rather surrender my life in the pursuit of justice, than save it and live under a tyranny of greed”

MISSION: To empower people w/knowledge & help them be their very best. My 23+ yrs. of Real Estate mortgage experience which includes vast insider knowledge and expertise enables me to empower people & reduce frustration during negotiations & loan modification process with their bank. INTENTION: To always give my very best to others in the service of God & humanity. I believe it is my duty to stand up for what I think is right.

Consumer Advocate/ Expert Trainer for Mindset & Empowerment to Successfully Modify Mortgages & SAVE Homes/Loan Mod Guru.
Proven Record of Achievement: Modified over 120+ loans including Sale Reversals. My expertise can empower others during the housing crisis w/insider tips, process, & knowledge. Extremely Resourceful. Trustworthy. Excels in meeting objectives using independent action, prioritization & leadership. Confident & poised interactions w/individuals at all levels. Self-motivated. Dedicated, Expert Reputation of Going Above & Beyond whats required. High standards. Achieves results in all life issues.

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