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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.
www.krebsfinancial.com

Article Source:http://www.articlesbase.com/mortgage-articles/7-things-to-know-about-loan-modifications-1767496.html

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Principal Reduction Program

January 18th, 2010

Simply put:  a Principal Reduction Program is a program that reduces the principal on your mortgage to your home’s current market value. 

Through a Principal Reduction Program your lender forgives the current negative equity on your mortgage.  This is made possible through the cooperative effort of private investors and funds from the federal government’s Troubled Asset Relief Program (”TARP”).

Once enrolled in a Principal Reduction Program, your loan is pooled with other loans from your lender.  The negotiators for the private investment group offer to purchase the pool of loans from the lender at a reduced price.  The lender is then able to access the government TARP funds to recoup up to 85% of the value of the mortgages.  Your mortgage is now serviced by the investors.

Once purchasing the loan, the investment group secures you with a new loan at the current market value, reducing the principal on your mortgage and eliminating negative equity.  The investors are able to purchase the loan at twenty to thirty cents on the dollar, enabling them to reduce your loan value while still profiting from the transaction themselves.

 At the end of the day it is a win-win situation all around: 

  • The lender collects exponentially more on the loan than it would through a foreclosure or short sale and opens its books for better performing debt.
  • The private investors profit from procuring the loans at a discounted rate and obtaining servicing rights on the loans that they purchase.
  • You are the biggest winner being able to reduce the principal on your mortgage to what your home is actually worth and eliminating negative equity without impacting your credit rating

 How do I get in a Principal Reduction Program?

 To qualify for a Principal Reduction Program, a homeowner must have:

  • Negative equity in his/her home (owe more than the home is worth)
  • Documented income
  • A debt-to-income ratio of 50% or less

Qualification basically depends on the homeowner’s ability to pay the new mortgage. 

For more information, please go to: http://www.principal-reduction-program.com, http://www.atlantic-mutual.com, or call 888-850-6772 to speak to one of our Financial Analysts. We can also be reached via email at [email protected]

Article Source:http://www.articlesbase.com/mortgage-articles/principal-reduction-program-1743796.html

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Principal Reduction Program

January 18th, 2010

Simply put:  a Principal Reduction Program is a program that reduces the principal on your mortgage to your home’s current market value. 

Through a Principal Reduction Program your lender forgives the current negative equity on your mortgage.  This is made possible through the cooperative effort of private investors and funds from the federal government’s Troubled Asset Relief Program (”TARP”).

Once enrolled in a Principal Reduction Program, your loan is pooled with other loans from your lender.  The negotiators for the private investment group offer to purchase the pool of loans from the lender at a reduced price.  The lender is then able to access the government TARP funds to recoup up to 85% of the value of the mortgages.  Your mortgage is now serviced by the investors.

Once purchasing the loan, the investment group secures you with a new loan at the current market value, reducing the principal on your mortgage and eliminating negative equity.  The investors are able to purchase the loan at twenty to thirty cents on the dollar, enabling them to reduce your loan value while still profiting from the transaction themselves.

 At the end of the day it is a win-win situation all around: 

  • The lender collects exponentially more on the loan than it would through a foreclosure or short sale and opens its books for better performing debt.
  • The private investors profit from procuring the loans at a discounted rate and obtaining servicing rights on the loans that they purchase.
  • You are the biggest winner being able to reduce the principal on your mortgage to what your home is actually worth and eliminating negative equity without impacting your credit rating

 How do I get in a Principal Reduction Program?

 To qualify for a Principal Reduction Program, a homeowner must have:

  • Negative equity in his/her home (owe more than the home is worth)
  • Documented income
  • A debt-to-income ratio of 50% or less

Qualification basically depends on the homeowner’s ability to pay the new mortgage. 

For more information, please go to: http://www.principal-reduction-program.com, http://www.atlantic-mutual.com, or call 888-850-6772 to speak to one of our Financial Analysts. We can also be reached via email at [email protected]

Article Source:http://www.articlesbase.com/mortgage-articles/principal-reduction-program-1743811.html

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Citimortgage & Citibank Home Loan Refinancing and Modification Options

January 15th, 2010

The Treasury department has signed and agreement with CitiBanks servicer, CitiMortgage that would allow Citibank to offer a more affordable and aggressive home plan for their struggling borrowers. What this means is that the lenders offering the loans are able to accept loan applications for homeowners and also offer the lender some incentives for every loan they modify using their new plan. Not sure what this means or even how you can benefit from this?

Since this new agreement has been agreed upon by the lender and the Treasury Department, Citibank and Citimortgage they have to offer this federal plan to any and all homeowners who request consideration for the plan. This means that if you had applied for a loan and have already been turn down, you can have them review your case again to be reconsidered for the new federally subsidized plan.

Ask yourself these questions below to find out if you are a candidate for the new help plan:

1.Did you get your loan before January 1, 2009?

2.Do you live in your home as your primary residence?

3.Do you owe less than $729,750 on your mortgage?

4.Does your current monthly payment exceed 31% of your gross monthly income? (Including insurance, taxes and homeowners dues)

If you answered yes to the above questions, approach a lender regarding the affordable home plan. Not everyone will qualify for this plan, however if you meet the required guidelines and you can prove it, your current interest rate can be reduced to 2% for 40 years. What is trying to be achieved is an affordable monthly payment. The monthly payment should only be 31% of your monthly income. Since the Treasury Department is paying Citibank for every borrower they help they are much more motivated to help the borrower. On top of the better rates and lower payments, every homeowner that stays current on their modified home loan for 5 years will be paid $5000.

Homeowners are being encouraged by President Obama to work with the banks in order to keep their homes. However, before you contact Citibank or send in an application, make absolute sure that you have all the necessary paperwork so you have the best possible chance of being approved. Take some time to learn the process for loan modification so you can be as prepared as possible. Don’t take any chances learn everything you can about the loan modification process.

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

Article Source:http://www.articlesbase.com/mortgage-articles/citimortgage-citibank-home-loan-refinancing-and-modification-options-1730493.html

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Re-Mortgaging in Spain in 2010? Five Things to Consider Before You Try

January 14th, 2010

The Barcelona Real Estate market was out of control in 2007. Absolutely everything which was sold made a profit, and the average price per square metre was at 3800 Euros. Fast forward to December 2009, and you can quite easily slash 500 Euros from that price, which although might not seem like much, if you’re buying a one hundred square metre apartment in the city, you’ll already be saving 50,000 Euros. Taking into account the number of brand new properties which are lying unsold as well as those people looking to upgrade or simply those who haven’t been able to afford the constant rise of their mortgage repayments, and it really is a buyers market at the moment, and many people are getting some fantastic deals.

 

It’s important to note first of all that before you start looking to invest in Barcelona, like many areas in Spain and indeed Europe at the moment, then your financial situation should be absolutely water-tight. Many of the lenders and financial institutions in 2010 are offering a fraction of the services and completing a tiny amount of operations and loans in comparison to years gone by. While it’s true that banks are launching advertising campaigns to attract customers in with never-before seen offers and the lowest interest rates in the history of the Bank of Spain, the requirements to qualify for those rates are equally as un-reachable. Here are five things you need to know.

 

Firstly if you’re an investor, forget about it. The exceptional interest rates and terms only apply to the habitual living space – i.e. your own home, and banks and building societies are not interested in second homes, investment opportunities or summer chalets.

 

Another huge shift in the mix which may come to a surprise is the percentage that financial entities expect you to be able to cover in respect to the repayments that the new loan will offer. That sounds more complicated that it is. What it means if that a couple of years ago, lenders would see how much you and a partner earn (or you alone) and then only offer a mortgage if the month repayments did not exceed around 60-65% of that amount. So in plain English if you earn 1000 Euros a month, the mortgage repayments cannot be above 600-650 Euros. In 2010 this figure has dropped to a tiny 40%. Which means for the same property, with a repayment of 600 Euros, you need to be earning 50% more than a couple of years ago.

 

A third thing to be aware of is the risk seems to have increased. Thinking about it logically, if you’re going to a bank to re-arrange your mortgage it means you’re unhappy with the repayments and want to see if they can offer a better deal. This means that as long as you’re managing to keep up with the current re-payments, then the new deal on offer should be absolutely no problem.

 

Number four on your list of things to check is the type of interest you’ll be offered. Most financial entities opt for one of two indexes; Irph or Euribor. Without going into too much boring detail, the Euribor is the European interest rate and you will be charged a percentage on top which is the bank’s profit. The IRPH index is a combination of the previous few months Euribor to create an average, supposedly more stable, although this is not the case.

 

Finally, remember that there is no such thing as a tracker mortgage in Spain, so your rate will be fixed for one year, and each payment will be the same. In one way this is good, as you know the same amount you’ll need to raise at the end of each month for your home loan, but don’t expect the repayments to fall if there’s a drop in the indexes, similar to what happened over 2008 to 2009 in Spain and Europe as a whole.

David Brydon has been living in Barcelona, Spain for 10 years and writes for Barcelona Real Estate Agents Modus Vivendi. Their Barcelona Real Estate Guidelines are a must-read for anyone serious about investing in the property market.

Article Source:http://www.articlesbase.com/mortgage-articles/remortgaging-in-spain-in-2010-five-things-to-consider-before-you-try-1722160.html

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