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We do these regularly. I work with Law firms in 46 states that are submitting loan modifications to our office for processing. Can discuss this with you, but it doesn't look good because you have a FHA loan. Many times we actually turn away cases involving FHA of loans.
The reason is you most likely will be denied - you have a low interest rate anyway. The two options for you are either make more money to make the payments, or let the home go because you cannot afford it. If you are considered for a modification, the interest rate is only reduced to par (current between 4.5% to 5%).
If you contact your Mortgage company, I do not thick you will get any where with them. They will what you to send in financial paperwork, then 3 to 6 months end up getting denied. Understand most Lenders are looking to max the amount of profit from your home loan. Just calling them up saying "Ok, ah....I want a lower payment", is not going to work. If fact there is no rule that requires your Lender to work with you modifying your loan.
There are many websites on the internet today saying do not pay for assistance, or you can get a mod for free... Lenders are hoping you will buy that line... By submitting documents directly to your Lender and letting them decide what you can afford, the mortgage company is going to max out their profits.
Finally the truth is coming out, here's a report on banks... chick on link.... Loan Modification Progress Chart | Eye on the Bailout | ProPublica (http://bailout.propublica.org/loan_mods/list - broken link)
The main reason people use Mortgage Attorneys - by having an experience 3rd party advocate negotiating on their behalf, most times may result in a better modification. Many people make a very big financial mistake trying to work directly with their Mortgage company's. Giving wrong information that can be used against them. Ending up in a worst situation, or a higher payment, or even losing their homes to foreclosure. Mortgage company's do not want homeowners using attorneys, because this will cut into their profits. your mortgage company's primary job is to service Pass-Through-Securities to investors.
Back to your case - the reason why FHA loans interest rates are not being modified lower than prime (could write a page here), it all boils down to Mortgage Back Securities, and investors getting their return on their investments.
Even though your lender holds your note - the actual loan amount is probably held by Ginnie Mae - link for more information... Ginnie Mae: Media Center
If you want me to comment further - need your lender name, amount owed, value of the property. What is your interest rate, gross monthly income, your hardship? Number of payments behind, plus where are you, which State?
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Last edited by Modification Specialist; 01-07-2011 at 02:18 PM..
...... .... 20-year fixed with FHA... term possibly can be extended..
It lowered our $400 payment to less than $300. We've been late on one car payment in 30-years, but never a house payment. ....good credit, showing responsibility...
WE are retired.....Fixed income..
husband ..diagnosed with Alzheimer's Disease .....medical hardship
has 15 drugs of which 2 are taken twice daily and three are administered 4 times daily. And we are both legally blind. ..medical hardship
COL is up; medicare payments are up and SS benefits are down. ..medical hardship
Do have any thoughts on this?
live in Illinois... Judicial State..
I am posting one of my private messages pertaining to FHA loans so that others can read this..
Hi
I can sympathize with your situation. Many people across America are facing the same crisis you are. When I speak with people looking for ideas to help their financial situation. Trying to work things out with your Lender so it benefits you... it doesn't happen this way.
You being punctual on your Mortgage payments - you are not showing you are in a hardship. You are giving your Lender no reason to modify your loan. This is the dilemma having to choose to go late into order to be considered for a loan modification.
If your Lender thinks you cannot afford your mortgage and they can make more money foreclosing. The decision they make is going to be the most profitable one. Thinking in this mind set, Mortgage Lenders are very predictable. Borrowers having a FHA loan, already have a low interest rate compared to borrowers on other loans.
However in your situation - noting that interest rates pretty much unchangeable, but you having a 240 term loan, extending it out to a 360 or 480 month term would substantially lower the monthly payment. This is something that can possibly by negotiated by an in house modification. It really depends on the lender.
In caution you if you are considering this by yourself - because your Lender is going to want to see all your financial documents first, before they decide which is the best course for them to pursue.
Right now not behind on your payments, the only thing you can do is contact your Lender to see if they can help you. Due to your age, and financial situation - I do not recommend you go late to try a strategically qualify for a modification, this would only increase the chance of of a modified higher loan amount, to a payment you could not afford which will lead to foreclosure.
Every situation is different - because your state is a Judicial state. Judicial foreclosures are processed through the court system, beginning with the lender filing a complaint and recording a notice of Lis Pendens. This process right now can take up to a year, because the court system is so clogged up.
I am kinda in a similar situation with the loan, but my bank won't take any note over 20-years - consequently if I did something like this I would have to move to a new lender. There are a lot of advatantages to small town living and one of them is our local banks are usually small, well managed with solid assets, and home grown like the crops.
I was listening to one of the prognosticators on TV who said someone at the Treasury said the housing bust would not bottom out for two more years in most areas; the housing market would take five additional years to make corrections and level off, and when it was over there would be 40,000,000 additional homes in foreclosure and more banks would fail. The good news is some areas will rebound sooner than others.
Since is history is doomed to repeat itself, I hope the banks that are still standing have learned a very painfiul lesson about economics they can remember. IO know bankers in several states in rural areas. They all said the same thing; they banked on farmers not hedge funds and they did not bundle. They never stopped using the old-fashioned lending rules, either.
.....the housing bust would not bottom out for two more years in most areas; the housing market would take five additional years to make corrections and level off .....It looks like we are in for a long ride.
(wife actually took me out for Dinner the other evening.....)
Continuing our discussion........
What we have seen over the last couple of years is just the icing on the cake!!! We have been dealing with the 2yr fix then adjustable loans (2/28 Arms). We are seeing now the 3/27, 5/25 year Arms and the 5yr Option Arms.. In the coming years going to be seeing the 7/23 Arms anf the 10yr Interest Only and 10yr Pick A Pay loans. There are going to be continuous mortgage problems through 2018.
My idea to turn this economy around - to deal with homes underwater. When the loan amount is more than the value of the home, allow the lender to do a silent 2nd mortgage attached to the title. The home owner doesn't have to pay under selling the property. Refinancing the 1st mortgage to 80% to 90% of the current value.
This allows the Lender to keep the full amount of the loan of their books, keeping wall street investors happy. Plus the home owner gets a break with a lower payment.
One could argue value to homes rise - that is true, but certain areas of our country shot up faster then others in the early 2000's. These areas have been the hardest hit by the Mortgage Crisis, this method will help the areas hardest hit.
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Last edited by Modification Specialist; 01-10-2011 at 01:40 PM..
(wife actually took me out for Dinner the other evening.....)
My idea to turn this economy around - to deal with homes underwater. When the loan amount is more than the value of the home, allow the lender to do a silent 2nd mortgage attached to the title. The home owner doesn't have to pay under selling the property. Refinancing the 1st mortgage to 80% to 90% of the current value.
This allows the Lender to keep the full amount of the loan of their books, keeping wall street investors happy. Plus the home owner gets a break with a lower payment.
..
It will never work. You know it. I know it. The majority of people losing their homes can't even afford to stay in their homes even after a loan modification. I think the last stats I heard were that around 40-50% of loan mods fail after one year. That's a high percentage. Maybe that stat has gotten a little better but I am betting it's still a high percentage.
You can take out the 2nd mortgage payment, take down the 1st to 80% of it's current loan value and my hunch is that 50% of those people still can't afford those house payments.
So many of those people did 80/20 no down loans, interest only. So they never paid into the principal. They lied on their income.
So you take the principal down to 80% of current value, those people still need to make the additional $300-600 principal payment into their mortgage plus interest (depending on loan values).
There is a reason people are in trouble with their mortgages. They flat out could not and can not afford their homes, even with a reduced mortgage payment.
It will never work. You know it. I know it. The majority of people losing their homes can't even afford to stay in their homes even after a loan modification. I think the last stats I heard were that around 40-50% of loan mods fail after one year. That's a high percentage. Maybe that stat has gotten a little better but I am betting it's still a high percentage.
You can take out the 2nd mortgage payment, take down the 1st to 80% of it's current loan value and my hunch is that 50% of those people still can't afford those house payments.
So many of those people did 80/20 no down loans, interest only. So they never paid into the principal. They lied on their income.
So you take the principal down to 80% of current value, those people still need to make the additional $300-600 principal payment into their mortgage plus interest (depending on loan values).
There is a reason people are in trouble with their mortgages. They flat out could not and can not afford their homes, even with a reduced mortgage payment.
I can understand your view of things - what you are saying is what I have also heard reported by the media.
My recommendation is not going to be a cure-all for every case, the hardest hit areas like Nevada, Florida, California, others - values in these areas are in the 100's of dollars upside down on the amount owed.
My plan is not intended for people $25k to $75k upside down, because value didn't shoot up as fast in these areas compared the the harder hit areas on our country. One major reason why value has gone down is the amount of foreclosures in a neighborhood. As soon as people come in and start buying, the will stabilize values into a upward direction. Values will return some faster in smaller neighborhoods than larger ones.
On the other hand knowing that pass-through-securities, have diverative and non divevative products that are sold to wall street investors either in MBS's. CMO's, REMIC's, and Strips. They could be re-engineered to redistribute (lower) the prepayment risk for their investments. Also by pooling these types of MBS's - could substantially offer investors higher returns.
If my idea is going to be sold - since Mortgages are the Bell-weather, the controlling force of our economy. Wall Street is going to have to see this as them making a profit.......
As for the old "Stated Loans" - wrote many of them when I was an L/O. I asked our Mitigation team - we are not seeing hardly any homeowners that had stated loans. Mainly the cases I am seeing along with my colleagues, very few cases are coming in where they had stated terms to begin with.
In the last month have taken in several interest only cases, get on average monthly one to two borrowers having option arms. Today brought in two cases that have a FHA back mortgage.
The most loan types I am seeing is borrowers that have Fanny or Freddy held loans, they are trying to work with Lenders directly. They are not getting the lowest payments allowed. The Lenders are reviewing income documentation to see what the max a homeowner can afford. Why - because banks are in this for the profit!!! Lenders are not processing modifications correctly to take advantage of lower interest rates. Again - because this is cutting into their profits.
What many people do not understand - if it can be proved they cannot afford the loan - the Lender will foreclose, they get their money back for the investors, and then the investors holds the note.
As for people not affording there loans - most of the cases I've analyzed, they need to change the way they are living..........
Last month turned down a case - a mother with her three sons (and one wife). Her sons were laid of their ($26.00 per hour) welding/construction jobs , The mother was the only one working. Because they could not find any work they were stay around home, watching TV, getting fat..... These case was an FHA held mortgage - with only her income, her Lender turned her down for a loan modification. The point - she needs to put her foot down and get her sons working to solve her problems. Jobs are out there - they are going to have to accept making less.
Another case in Georgia - a man had a $1200 per month auto payment, but could not afford his $890.00 Mortgage payment.. Not hard to see where thew problem is.....lol........
A case in New Jersey - spoke to a wife about their financial situation, the husband only one working, she was complaining her credit cards cut her off, so they stopped paying them.....
This week went over a house in Amityville NY - 13 people living in one house!!! 4 sisters bringing money into the household - 1 collecting disability, 1 working as a school buss driver 4 hours a day, one working 4 hours as a Home health AID, and the oldest a manager at White-Castle..... The rest of the family was sitting around watch a 48' Plasma TV. while one of the sister was showing me a letter that their Lender denied their modification......
....I can't make this stuff up....
.
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Last edited by Modification Specialist; 01-11-2011 at 03:35 PM..
I have had it. I applied for a modification in March 2010 with BOA. In July they said they lost the paperwork and to resubmit it. I did that. Then in Sept, i got another letter stating they needed the tax returns(again) etc, so I sent it again. Then last week I get two fedex letters saying they need the paperwork again.
It is so appauling that the banks are taking so long in doing this. it is their own fault for running out of the time of 90 days when they get the paperwork and then only to ask for it again. Meanwhile, I keep sending this paperwork and nothing happens.
YEsterday the gal on the phone told me to talk to the underwriter ; HELLO : they will never give out the underwriters number and they say they can only contact them by e-mail!!! So How can I talk to them??
I wish the banking commission would take heed and do something about the way the banks are treating their customers. if I could pay the mortgage, I would. i am actually sending them half which is what I can afford. And then they wonder why I shout at them on the phone.
I have had it. I applied for a modification in March 2010 with BOA. In July they said they lost the paperwork and to resubmit it. I did that. Then in Sept, i got another letter stating they needed the tax returns(again) etc, so I sent it again. Then last week I get two fedex letters saying they need the paperwork again.
It is so appauling that the banks are taking so long in doing this. it is their own fault for running out of the time of 90 days when they get the paperwork and then only to ask for it again. Meanwhile, I keep sending this paperwork and nothing happens.
YEsterday the gal on the phone told me to talk to the underwriter ; HELLO : they will never give out the underwriters number and they say they can only contact them by e-mail!!! So How can I talk to them??
I wish the banking commission would take heed and do something about the way the banks are treating their customers. if I could pay the mortgage, I would. i am actually sending them half which is what I can afford. And then they wonder why I shout at them on the phone.
Dorothy
Your lender Bank of America is not going to be forth coming giving you any information. Especially if you have a FHA loan. These are the hardest types of loans to have modified. Because you have a low interest rate already. It is almost impossible to get a modification on these types of loans if you are not late.
If you are behind on your payments (you mentioning making half payments), you have to be really careful when you report your income to them. If it can be shown your income is not enough to support a modification at a par interest rate. Then can move towards foreclosure - not notifying you until the latest moment. I can sympathize with your frustrations, understand your Lender is looking to maximize profits on the loan they originally gave you. In their computer - you are not a person, you are a loan not producing.
Take a moment to step back and look at your situation. It is you - it is your Lender, between is your loan. Right now because you are part of the problem, having the loan. They are in control. If they determine there is no longer profit in a loan. They can foreclose, giving your loan note back to the investors, and receive the outstanding balance back for new loans.
This year I am speaking to people in many states that have BoA as their Lender, not understanding why they are being turned down for as modification and facing foreclosure.
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