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- Understanding Loan Modifications - What You Don't Know Could Hurt You!
Understanding Loan Modifications - What You Don't Know Could Hurt You!
- By Marlon Baugh
- Published April 13th, 2009
- Real Estate
- Unrated
Marlon Baugh
Marlon Baugh is a nationally-known mortgage expert. Since 2003, he has specialized in Florida FHA Mortgage Loans for people with Bankruptcies, Foreclosure or with other credit issues, as well as Florida Loss Mitigation. If you would like a Free Copy or to get instant access to the remainder of this Insider Mortgage Report, please visit http://specializedfinancialsolutions.com/lendersexposed.htm or Call 954-678-5796
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More and more Americans are at risk of foreclosure and losing their homes as the U.S. economy seems to deteriorate on almost a daily basis. If it's not banks shutting down, it's the unemployment rate increasing to rates not seen since the great depression.
Lenders are swamped with applications from home owners that are in default and don't have the man power to keep up with the demand from home owners that want to save their homes. The dream of home ownership seems to be withering away and is becoming more of a nightmare for home owners as their homes are losing value on a monthly basis and many have adjustable rate mortgages that spiked up and made the payments no longer affordable. Today the solution for many home owners that want to keep their homes is known as a Loan Modification. This is one very powerful tool that have helped the average Joe's and Jane's out there to save their home from foreclosure.
If you find yourself falling behind on payments because of an adjustable rate mortgage, reduced hours at work, divorce, illness or any other type of financial hardship, then working with a loss mitigation expert can be your saving grace. Although you can attempt to work directly with you lender to get a modification, it is highly recommended to have a professional handle your case as they know exactly what the lenders are looking for and can increase your chances of actually getting approved.
If you attempt the loan modification yourself, you
will find that the lender will normally try to take advantage of the home owners and not work out a mutually beneficial modification. Statistics have shown that 55% of home owners that attempt a loan modification without a professional, usually end up back in default within the first 6 months.
The modification process is a very time consuming and frustrating process, as each lender has its own standards and procedures that makes it very difficult for many home owners to attempt on their own. To make matters worst, these lenders seem to change their guidelines and requirements almost on a daily basis to accommodate the ever changing real estate market.
A good loss mitigation company can use TILA (Truth In Lending Act) and RESPA (Real Estate Settlement & Procedures Act), as leverage to get a speedy and beneficial modification that may include a rate reduction ( 0% -6%) and or principal reductions to today's current market value. These two ACTS were developed to protect borrowers from predatory lending.
Beware of companies that offer specific guarantee’s and what I mean by that is a company that tells you a specific rate, such as 2% and if they promise a reduction in the principal amount you owe. Principal reductions happen but very rare, normally there is a 1 to 2% chance of see a reduction in the principal amount. And the reason it is impossible to guarantee a specific rate, is because the lender is the one that determines your rate and terms and the only way to know what you will receive is once you get an approval from the lender which will normally take 60 -90 days.
Lenders are swamped with applications from home owners that are in default and don't have the man power to keep up with the demand from home owners that want to save their homes. The dream of home ownership seems to be withering away and is becoming more of a nightmare for home owners as their homes are losing value on a monthly basis and many have adjustable rate mortgages that spiked up and made the payments no longer affordable. Today the solution for many home owners that want to keep their homes is known as a Loan Modification. This is one very powerful tool that have helped the average Joe's and Jane's out there to save their home from foreclosure.
If you find yourself falling behind on payments because of an adjustable rate mortgage, reduced hours at work, divorce, illness or any other type of financial hardship, then working with a loss mitigation expert can be your saving grace. Although you can attempt to work directly with you lender to get a modification, it is highly recommended to have a professional handle your case as they know exactly what the lenders are looking for and can increase your chances of actually getting approved.
If you attempt the loan modification yourself, you
The modification process is a very time consuming and frustrating process, as each lender has its own standards and procedures that makes it very difficult for many home owners to attempt on their own. To make matters worst, these lenders seem to change their guidelines and requirements almost on a daily basis to accommodate the ever changing real estate market.
A good loss mitigation company can use TILA (Truth In Lending Act) and RESPA (Real Estate Settlement & Procedures Act), as leverage to get a speedy and beneficial modification that may include a rate reduction ( 0% -6%) and or principal reductions to today's current market value. These two ACTS were developed to protect borrowers from predatory lending.
Beware of companies that offer specific guarantee’s and what I mean by that is a company that tells you a specific rate, such as 2% and if they promise a reduction in the principal amount you owe. Principal reductions happen but very rare, normally there is a 1 to 2% chance of see a reduction in the principal amount. And the reason it is impossible to guarantee a specific rate, is because the lender is the one that determines your rate and terms and the only way to know what you will receive is once you get an approval from the lender which will normally take 60 -90 days.