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How it works:
If you owe more than your property is worth then the new loan will be at the current appraised value of your home with a 30 year fixed mortgage at a low interest rate (4.5-5.9).
Just like a loan modification you have to have a hardship of some sort that has effected you financially, but show that you can afford the new loan.
For more information email me at amiller@firststatelendinginc.com
A short refinance is where your existing lender agrees to a short payoff, by reducing your principal balance to market value PLUS enough to cover the new lender's equity requirements AND refinance closing costs. In many ways, this is exactly what the Hope for Homeowners Program offers. However, the key difference here is that successful short refinances now happen in cases where the borrower is NOT late - the reason being, you will not qualify for a traditional FHA refinance if you have been late on your mortgage within the past 12 months. *The exception is FHASecure, where the program grants exceptions to those borrowers who have gone late as a result of an interest rate increase only. If you are successful with a short refinance, you will not have to share your equity with the government. In fact, all of the loss mitigation alternatives mentioned here will not require that. Why an FHA refinance and not a conventional or jumbo? FHA guaranteed loans are the only ones that will refinance up to 95% of a home's market value. Otherwise, your existing lender would have to write down enough to give you 10% equity to qualify for a conventional loan PLUS more to cover closing costs- and that's simply not going to happen.
• You must agree to share both the equity created at the beginning of this new mortgage and a portion of any future appreciation in the value of your home. (link to equity and appreciation sharing examples for website).
• In addition to an upfront mortgage insurance payment of 3%, you will pay a 1.5% annual mortgage insurance premium on your outstanding mortgage balance. This premium will be included in your monthly payments.
• You will need to pay closing costs on the loan. You will receive a Good Faith Estimate of these costs.
Owe 290k and is worth 225k
According to X company, the new value of the house will be 200k
I would like to know how in the world 290k is set down to 200k, what is it that 90k are wipe out of the face of the earth.
Do I have to pay back later during the life of the loan, or will I be set to pay a house for 60 years?
A reputable loan modification company CAN be a great help, if it honestly assesses your situation and identifies a realistic chance of getting you a good mod. Even then, be suspicious if you are asked for a large up front fee, e.g. in excess of $2,000. The company I work for charges (after a detailed and careful free assessment process) a TOTAL of $2,600, with no more than half that charged at outset, and the balance is payable when a satisfactory modification is attained. Even the initial payment is refundable, if the lender unexpectedly issues a flat denial.
You need to approach the idea of a modification carefully, with eyes wide open. REMEMBER, If you have significant negative equity, whatever your payment is, or type of loan, you are doing no more than paying rent to your lender - you will not, in this housing market, regain that equity and sell with a surplus, for MANY YEARS. I have clients who have made the arguably sensible decision of 'walking away', and renting the IDENTICAL MODEL of their home up the street, with a monthly payment of aroung HALF their previous mortgage payment. Hey, they can even put their furniture EXACTLy where it was in their 'owned' property!
I'm not RECOMMENDING that: it's your life, & your decision. But you should NEVER let your home kill you financially, OR emotionally. Please feel free to contact me if you wish to share your circumstances. As a Realtor® I will honestly give you the best advice I can.
BTW this 'Blownmortgage' web site seems to me to be an EXCELLENT one of its kind, offering sensible, impartial advice. There are too many rip-off loan mod. companies/individuals around trying to screw the vulnerable. SHAME ON THEM.
Phil. 916 715 4986. philryder@camoves.com
Thank you
Fact: The Loss Mit Dept inside Lenders & Servicers say that if a H/O chooses to "Do it themselves" they will get a 100 - 200 dollar break, if they go through an attorney the H/O has more leverage and usually gets what they need, so there you have it right out of the horses mouth. Having the right legal representation so that a H/O can maximize their chances of correcting their current scenario and send them off on a more stable path is our goal and we are accomplishing that 1000's of times over at this firm. I know that there are a large number of scammers out there but a H/O dealing with their own Mortgage Company is like sending a lamb to slaughter..........Bond
I would be considering these factors:
-your new monthly payment vs. cost of renting
-how long is the foreclosure process in your state (in Michigan there is a 6 month redemption period, so the entire process can take almost a year to get you out of the house if you stop making payments) This allows you to save money while living in the home making no payments
-how long will it take you to rebuild your credit
-the bank may still come after you for the deficiency, because you signed a note when you bought the house which does not go away unless you declare bankruptcy (many times banks will not bother chasing you down for the deficiency because they know you can declare bankruptcy)
-it might be worth it writing them a letter stating that you are not interested in the loan mod unless the balance is reduced to market level (and you would not want to be making payments to them during this time, as they won't take you seriously if the money is still coming in)
Good luck....
1099s. I would also anticipate that there will be some tax law changes with
any mortgage bailout that would relieve this burden. Not that you should
do anything based on what may happen but it is a consideration. Also, you
should always consult a tax professional (lawyer, accountant, etc.) for any
implications on your taxes.
As far as loan modification companies that offer a "guarantee," the problem with that is they just won't be around when it's time to give the money back...a guarantee is only as good as the company that issued it. Most of these outfits don't last long. In the spirit of full disclosure, I am a real estate attorney and manage www.mcfarlinlaw.com.
You might want to fill out the form at the bottom of this post (above the comments) and someone from the Mortgage Modification Legal Network will contact you directly about your options. There's no obligation and they'll tell you whether they can help you or not on the first call. (Disclosure: If you work with them I will make a commission as I'm an affiliate.)
Good luck!
recommended that you get the info you need to do it yourself. I think that
the company recommended has good information. That's all.
A great service that shows homeowners whether or not they are likely to qualify for Loan Modification is called Loan Amnesty
Contrary to the recent news, banks are offering loan modifications. However many of the applications are not accepted for these reasons:
1. The application is incomplete. In contrast to the past, banks require perfect documentation. For example, if a person is self employed they will be required to provide a current year to date P&L. Bank statements and Payroll records must be current(past 60 days). Oftentimes the banks won’t review a file without current information even though they are only reviewing the file 90 days after it is submitted. Customers should continue to submit bank and payroll records to the bank until the application process is complete. The banks will not remind clients or call them to let them know their applications are incomplete or their information is outdated.
2. Parts of the file is lost by the bank or servicer. Banks and servicers are receiving thousands of applications per day(most by fax). When submitting an application to the bank, homeowners should write the loan number on each and every documents, so that the banks can put the documents in the correct file. Servicers have available to attorneys methods of submitting applications through web portals. These are not currently available to homeowners.
3. Homeowners are not using the banks forms. Most banks now have websites with preprinted forms to use for the application. If homeowners use other forms for hardship letters or financial statements, the reviewer may not recognize it as such, and deny the application without review.
4. Homeowners are trying to make themselves look as impoverished as possible to qualify. The goal of a homeowner should be to explain to the bank why they can not make the current payment. If the homeowner exaggerates expenses or underreports income, he or she may make themselves ineligible for a modification, when they might otherwise be eligible.
5. Homeowners are giving up. The banks are expanding their programs weekly. Even if a home owner was denied an application last year or even last month, they may be eligible for a program now. It doesn’t hurt to resubmit an application with updated information.
Please call or email me with any questions.