Loan Modification For Dummies – Getting Your Home Mortgage Loan From Bank of America or Wells Fargo Modified With The Help of Companies Offering Loan Modification Programs27 Jul
Recession has brought about the mortgage crisis and continues to cause homeowners to lose their homes to bank foreclosures, so when news of loan modification came out, real estate professionals are in agreement that this could be the answer to home foreclosure problems and allow homeowners to continue to live in their well-loved houses. According to the latest RealtyTrac data, for first half of 2011, there are 20 states in the country with a highest foreclosure and unemployment rate, with west states on top of the list namely Las Vegas Nevada , Arizona ranks 2nd, and Los Angeles California. Other states include Utah, Georgia , Idaho Michigan, Florida, Colorado, and Illinois. Losing one’s home can be extremely nerve-wracking but consumers now have several options to preserve home ownership through Freddie Mac, Fannie Mae, and the Federal Housing Administration (FHA). Here, loss mitigation works to negotiate mortgage terms for the homeowner that will prevent foreclosure.
What is Loan Modification?
A loan modification is a change in one or more terms of a borrower’s home loan, allowing the loan for renegotiation or to be reinstated, and leads to a payment scheme the homeowner can afford.
The FHA loan modification plan is known as “Hope for Homeowners Program” and a bit different vs the general federal loan modification programs like Home Affordable Modification Program (HAMP), Home Affordable Foreclosure Alternatives and Making Home Affordable Programs in relation to terms and conditions associated with the program. FHA loans have very limited options within the agreement of loan modification in comparison to general loan modification.
Although programs and guidelines are changing and easier for homeowners to get the financial help that they need today, sadly, not everyone will qualify. Interested borrowers will have to meet certain eligibility requirements. Second, all applicants should go through the process of completing loan modification application forms, and provide proof of their income. Loan modifications have become such a booming business opportunity that brokers and lenders wanting to provide assistance complete the process make use of specialized software called the SX3 Loan Modification Software so that borrowers can secure an application package online and follow up on their case on the web.
How To Get Your Home Loan Modification Approved
In line with President Obama’s HAMP, $75 billion dollars was allocated from the Federal government so that lenders can participate in this government subsidized plan. Using mortgage calculators, homeowners are encouraged to learn how they can qualify for refinance or mortgage modification basing on income and calculation of FICO scores.
What is FICO? Wikipedia defines FICO as a “publicly-traded corporation (under the ticker symbol FICO) that created the best-known and most widely used credit score model in the United States. A credit score is a numerical expression based on a statistical analysis of a person’s credit files, to represent the creditworthiness of that person. A credit score is primarily based on credit report information typically sourced from credit bureaus.”
Increasing your chances of success of getting your loan application approved can be done by following these tips.
1. Show proof of hardship. Prove that you are not able to make payments on your current loan such as unforeseen expenses. If you’ve just been made redundant you can provide a redundancy letter.
2. Show past and recent payment records. Provide proof of past payment habits on loans before you got into difficulty. Your ability to repay the reworked loan amount will improve your chances of being approved.
3. Know your accounting 201. There are three main financial documents that are important: the Income Statement, Statement of Retained Earnings, and the Balance Sheet. Have an accurate and detailed record on a worksheet of your present expenses versus your income. Using a mortgage calculator, work out a sample financial statement and carefully examine. Samples of DIY worksheets can be found on the internet. Don’t try to hide anything. Dishonesty will count heavily against you and will lead to your application being denied.
4. Write a hardship letter. When writing these types of letters, describe how you got yourself into the current financial status and your need for assistance. Examples of acceptable reasons lenders consider valid are divorce or separation, loss of income, death of spouse, co borrower or family member, illness, and job relocation.
Here is a list of the authorized lenders approved by the Treasury Department to offer President Obama’s Federal loan modification plan.
Aurora Loan Services, LLC.
Bank of America, NA
Bayview Loan Servicing, LLC
Carrington Mortgage Services, LLC
Chase Financial, LLC
Citimortgage, Inc (Citigroup)
Citizens First Wholesale Mortgage Co.
Countrywide Home Loan Servicing LP
First Federal Savings and Loan
GMAC Mortgage LLC (Ditech)
Green Tree Servicing LLC
Home Loan Services Inc
IBM Southeast Employees Federal Credit Union
Lake National Bank
National City Bank
Nationstar Mortgage LLC
Ocwen Financial Corporation, Inc
RG Mortgage Corporation
Residential Credit Solutions
Saxon Mortgage Services
Select Portfolio Servicing
Technology Credit Union
Wachovia Mortgage FSB
Wells Fargo Bank, NA
Wescom Central Credit Union
Wilshire Credit Corporation
Among America’s largest HAMP services list are:
Bank of America – has been leader in modifications since the beginning of the HAMP program. It is one of the oldest banks in the USA, now stands at number three in terms of largest bank in the country and ranks third in mortgage services in America with nearly 84,000 active HAMP modifications.
Ocwen Financial Corporation – a leading provider of residential and commercial loan servicing, special servicing and asset management services, had 24,454 permanent HAMP modifications active in 2010.
American Home Mortgage Servicing Inc (AHMSI) – With a multibillion portfolio under management, AHMSI is one of the country’s largest servicers of Alt-A and subprime loans with 16,167 active HAMP Modifications.
JP Morgan Chase – One of the oldest financial institutions and has the largest market capitalization among the banks in the US., JP Morgan offers a number of services namely commercial banking, investment, card and retail financial services namely mortgage lending and car and auto finance. Has 67,722 active HAMP Permanent Modifications.
Wells Fargo – this financial giant started in 1852 and is now one of the largest banks in the US and one of the most reputed companies in the US offering mortgage services today.
>America’s Servicing Company (ASC) is a division of Wells Fargo Home Mortgage that services loans for other investors.
CitiMortgage – Considered by many experts as the leading mortgage company world wide. It was started in 1970 in America and operates in 54 countries today, with 52,856 active HAMP Permanent Modifications.
GMAC Mortgage – one of the nation’s largest home mortgage originators. The number of HAMP Permanent Modifications that started with Citi was 36,718, and 34,116 Permanent Modifications were active as of Nov 2010.
Wachovia Mortgage Company – It is another reputed company in US for mortgage services. The company offers almost every service related to banking. Wachovia has now become a part of wells Fargo.
Residential Capital LLC – Residential capital is a real estate finance company offering innovative capital solutions to customers from across the world. The company is a market leader both in the US and UK.
MetLife Inc – offers financial services together with insurance services to its customers in India and most parts of Europe and Asia.
Quicken Loans – A variety of home mortgage loans are offered by the company. It is one of the best online home mortgage loan processing company and retail mortgage lender.
SunTrust Bank Inc – with more than 1500 branches in VA, United States, it specializes in a number of services like banking, mortgage lending, credit card, mutual funds, insurance and asset management services.
US Bank Home Mortgage – offers online home mortgage processing and refinancing services and specializes in online banking, credit card processing, especially mortgage loans and wealth management.
PHH Mortgage- With its process efficiency, multi channel business, and customer service, it offers mortgage loan and refinancing services. It provides one of the leading and best of Mortgage Solutions in the country.
Other mortgage companies include HSBC, Impac , Everhome, Litton Loan Servicing, Midland Credit Management, EMC, Citibank New York, Nationstar.
For the past three years the banking industry continued to reel from recession and mortgage meltdown causing more than 300 banks to fail since Jan. 1, 2009. A few of these banks are:
IndyMac Bank Pasadena in 2008 (OneWest)
Bank of Miami, N.A. in 2010
San Diego National Bank, Ca in 2009
City Bank Lynwood in 2010
WaMu in 2011
Loan Modifications Helpline
Realistically, not everyone will get fair assistance they need. If you feel you are being pushed too far, you can get help from government agencies. The National Mortgage Help Center assists homeowners with home foreclosure through their network of foreclosure prevention specialists. You can also get help from NACA (Neighborhood Assistance Corporation Of America) to help you through the process. Initially, you may have to fax your documents for them to assess. If you need a lawyer, lawyer listings can be searched on the internet including phone numbers, reviews and forum. Lawyer Central is one website where you can look up lawyers listed according to regions, cities and states. The site also provides a free case review form to assess you for loan eligibility.
Why Lenders Agree To a Mortgage Loan Modification?
Mortgage loan modification is a term that is used to describe changes made to an existing mortgage loan to make it easier for you to continue repaying your loan payments. In general, modifications rarely happened in the past because mortgages are legal contracts and are not normally altered once created. However, with the foreclosure crisis today, modifications to mortgages have become common.
So why then would a lender be willing to modify your mortgage? Banks and mortgage companies do not modify mortgage loans out of compassion but rather to prevent its own financial loss. Foreclosures are expensive for lenders and cost them the profit that they hoped to get from lending you the money in the first place. So if your lender can help you avoid foreclosure by agreeing to a mortgage loan modification such as changing the terms of the loan by extending the period of time or refinance the loan with a lower interest rate so that you can afford the payments, they will do so.
Applying For A Wells Fargo Loan Modification
Although you do not technically need a lawyer, it is recommended that you seek help from a legitimate loan mod adviser if you have never done this before. Wells Fargo home loan modification requires up to six months of documents and specific requirements to receive a permanent mortgage modification so professionals who have had experience and adequate training with loan modification and previous relationships with lenders would prove to be a big contribution to the speedy approval of your application.
How To Choose The Best Loan Modification Companies
Despite homeowners facing home foreclosures, scams and con artists continue to target home owners. And because brokerage laws are not well regulated, mortgage fraud and scam is still a problem; from borrower to broker to lender. There is so much money in mortgage brokerage that lead companies to surface on the internet, selling real-time, fresh, recycled and aged mortgage leads. We should therefore be wary in selecting mortgage companies. Select those that have BBB or Better Business Bureau ratings.
Common Loan Modification Programs Scam Types
Charges – clarify backend, upfront fees or high fees for work such as in the case against Procity
Affiliate claims – claims of being backed up by a reputable attorney but no lawyer or law firm is identified or mentioned.
Lease or rent-back – homeowners are told to transfer title to a third party, grant exclusive rights to rent the home and then promises to buy it back later at a cheap price. Transferring your deed gives the con artists the power to evict you and sell your home.
Bait and Switch–homeowners think they are signing agreements for a new loan to make the mortgage current, but sign away the home and are left holding the mortgage on a home they no longer own.
Equity Stripping–a buyer purchases the home for the amount of the arrear-age and flips the home for a quick profit.
Request for “power of attorney” to the loan modifier - The fraud may use the power of attorney to sell the home right out from under you.
Complaints for Fraud and Scam can be reported to the following agencies:
The Federal Trade Commission
Federal Bureau of Investigation (FBI)
HUD (Housing and Urban Development)
The Federal Deposit Insurance Corporation (FDIC)
The Better Business Bureau
The Chamber of Commerce
Who Are Qualified For Bank Of America Loan Modification
Bank of America is a participating lender in the President Obama’s HAMP. It is funded with $75 billion dollars of Stimulus Bill money to help struggling homeowners avoid foreclosure and keep their homes. It has three available options for loan modification namely conventional, Fannie Mae and Freddie Mac. Bank of America promotes retention of home ownership or reinstatement options under their Forbearance, Repayment Plan, and Loan Modification. These plans intend to bring the loan current or provide relief until they can be reinstated while Short Sale and Deed-in-Lieu liquidate the loan. These options would assist homeowners in default and aid in transition to lower-cost housing or relocation.
People who are qualified are those who are already in default on their Bank of America mortgage and facing foreclosure. Some people not yet in default may also qualify if they are facing foreclosure in a very short time. For example, people who had no real change in income, expenses, or house payment amount, but rather poor money managers and not victims of financial hardship are not qualified for this program.
Loan Modification In Broward County Florida
It is saddening how Florida, the Sunshine state, is now one of the states with the highest foreclosures with hundreds of homeowners being evicted from their homes everyday. The state of Florida provides a statutory guideline for filing a 3-Day notice eviction but many jurisdictions have interpreted it in different ways. Broward County is one of those jurisdictions where an eviction notice is not clear, making it difficult for a non-lawyer to successfully evict a tenant. Still, homeowners are in battle whether to short sale or apply for a loan modification.
To help reduce home loan financing costs, the Housing Finance Authority of Broward County has launched a 2010 Mortgage Credit Certificate Program for qualified homeowners in the county. The program entitles a qualified applicant to a federal income tax credit in an amount of up to $2,000 annually. This will enable qualified owners or buyers to benefit from a dollar-for-dollar reduction of their tax bills even those who owe federal income taxes. Moreover, the homeowners continue to receive tax credits each year as long as they continue to live in the home which is financed by the program.
Loan Modification For Dummies
With so many homeowners on the brink of foreclosure, loan modification attorneys and loan modification companies have mushroomed. Be careful with whom you deal with though as fraudsters are also taking advantage of the real estate debacle. They disguise themselves as loan modification experts ready to help beleaguered homeowners, when, in fact, they are there to bilk them of some money. For this reason, other homeowners prefer to handle their loan modifications by themselves, rather than pay upfront payments, backend fees and monthly charges to the agency for their services. If you want to take the Do-It-Yourself route, there are plenty of resources which can serve as your guide. Again, prudence is essential in choosing the right material. One resource you may consider is the Loan Modification for Dummies, which you can buy online. It includes tips and advice on what to ask your mortgage lender, mistakes to avoid when modifying your mortgage loan, and a list of documents you need to prepare and submit to your lender.