Modifying loans on a case-by-case basis and fixing rates for limited periods won't avert enough foreclosures."With this type of cooperation from loan servicers, we can save tens of thousands of people from being added to the foreclosure lists. This common-sense approach does not involve a government subsidy or bailout," said Governor Schwarzenegger
"We are falling behind the curve, we are way above where we need to be. There are a lot of unnecessary foreclosures going on that can be prevented through more aggressive loan modifications." FDIC Chairwoman Sheila Bair's.
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Frequently Asked Questions |
1. What is a Loan Modification?A Loan Modification is a process where the terms of a mortgage are modified by the lender to lower your monthly payments and to allow you to skip payments in order to get you back on your feet. Check out our Case Studies to see some real life examples. 2. Who should apply for a loan modification? Anyone that is having trouble paying their existing loan. In today’s housing conditions banks are willing to work with homeowners that are having a hardship. You do not need to be behind on your payments to apply for a loan modification.
3. What should I expect the terms to be on my new loan?Banks have rapidly changing guidelines for Loan Modifications. A modification may include a lower interest rate, payment rescheduling, principal reduction and longer terms.
However, many banks are offering to lower your interest rate to 2% over 5 years and then adjusting upwards to finally set near 5% for the remainder of the loan.
4. What if I’m behind on my payments? Typically, banks will allow you to add your missing payments to the end of your mortgage balance.
5. What about government assisted programs? Obama’s HAMP or “Home Affordable Modification Program” is available and has been extended until October 3, 2010. Please understand that you must still qualify for HAMP just like any other loan modification.
6. What if I have already been turned down by the bank? The government has asked for all lending banks to help in the foreclosure epidemic and modify mortgages for all troubled homeowners. We can teach you how the bank will allow you to re-submit your documents and submit them the correct way.
7. What if I don’t have all the documents the bank wants? What’s important is to start the process. The bank wants to do loan modifications so we will teach you how to get the bank to work with what you have.
8. What if I am already using a loan modification company or attorney? You should still be educated and informed on the process and what your new loan will entail. You need to be able to understand what your company is telling you. Get prepared to take over your loan modification, should you lose faith with your current loan modification professional.
9. When should I consider a Short Sale? When you can’t afford your payments and your house is worth less than you owe.
10. What if my credit is bad? A Loan Modification is not based on credit. The banks are trying to make a good loan out of a troubled loan.
11. What if I have no equity or I am upside on my home? It does not matter. Principal reductions are becoming more popular among banks. A principal reduction means the bank will discount the total loan amount to the current value of your home.
12. What if my income is too low? You will need to show the bank you or all others in your household can afford the new payment. This is done in our Pre- Qualification when you start the process.
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