Shawn M Peck asked:


The climate of the subprime mortgage era and its loose lending guidelines are long behind us.

 

The subprime lending practices have left many homeowners on the brink of foreclosure due to risky ARM mortgage loans written between 2002-2006. The government recently started a rescue package bailing out insolvent banks. In this package there is a provision for these bank and hedge companies to place a moratorium on subprime mortgage foreclosures. This is mutually beneficial for the bank and the homeowner. The bank will see less losses due to foreclosure proceedings,and property values in return will eventually stabilize. The Hope Now program recently passed in government mandates that the lenders that got us into this mess, are to work with borrowers to curtail any further losses for the bank in foreclosure. This is great news for the struggling homeowner in forclosure. The lender is now, more than ever, willing to modify your mortgage(loan modification) to keep you in your home and agree on a reasonable monthly payment. You must be able to demonstrate a reasonable ability to pay, but a loan modification is about keeping you in your home.

 

Foreclosures are costly for neighborhoods and for banks. Foreclosure involves attorney retainers for 1000’s of loans on a banks books that could benefit from a loan modification. Some of these properties that could benefit from a loan modification have little or no remaining equity. A loan modification is a better alternative that a short sale for the homeowner and the bank. (SHORT SALE: Is where the borrower sells the property for less than the mortgage balance) A Short sale drives a neighborhood price down, the only person who benefits is the investor that buys the property via short sale. Your neighbors suffer a lower property value, The bank sustains losses, and you still have to leave your home with no money to rebuild after a significant set back. If the bank does a loan modification, gives you a more affordable payment, they lose potential interest gain. The bank secures interest and principal and you secure your home. The most costly proposition is a consummated foreclosure.

 

The bank does not want your home. The bank with do a loan modification if you or your attorney supervised counselor communicates with them.  The first step and first advantage of having a representative petition your mortgage servicer is the loan document audit. This is something that involves a knowledge of apr calculations,state fee thresholds,compliance regulations,and RESPA. The average homeowner is not aware that what the mortgage company did is illegal. We are seeing staggering numbers of TIL,RESPA violations. The predatory lending laws that are state specific have been the main culprit second to TIL (Truth In Lending Act) violations.

 

The lender is required to disclose the APR in the TIL. The lender that is in violation knows that litigation may be imminent if they don’t do a loan modification for a borrower in trouble. A loan modification needs to explain the reason for financial hardship. The lender will want to see that by modifying the loan you have the means to support the modified payment. A loan modification is not an interim solution. It is a long term conversion for an ARM to a lower,affordable monthly payment without closing costs.

 

If you or a loved one are facing foreclosure or fear you may not be able to make your next mortgage payment, you need to call me for a free consultation.

 

The longer you delay the further you become from HOPE NOW.