What is the Process for a Bank Loan Modification?

When getting information on receiving bank loan Modifications it is important to have due diligence. In other words, companies charge you a fee to get a modification. You will want to find one with the lowest fees charged to get the modification loan.

In some cases the best bank loan modifications to consider are the federal government modifications, which do not charge any fees. It is of utmost importance during this modification process to be in contact with your bank on a regular basis, to keep them abreast of this process.

Many times getting approved for these bank loan modifications are a must, so your home is not involved in a foreclosure, possibly due to a loss of a job, sickness, or other hardship. Long before you are in state of possibly losing your home you need to be in contact with your bank explaining your personal situation. Keep in mind, sometimes it may take quite awhile for you to get bank loan modifications completed, due to the large amount of people who have sent in their applications also.

One of the best attributes of securing your loan modification, is many times your monthly payment on your home is decreased, close to one half of what your previous payment used to be. Of course there are always exceptions to the rule. But either way, you should save a tremendous amount of money on payments every month. This should help you in a significant way in keeping to your budget.

Once your bank loan modifications are approved, be sure that you can afford the new payments. The last thing you need is to have a collection agency harassing you because you can’t afford your monthly payments.

Make sure that your payments are never late, especially when you have your loan modification approved, because if you are late, this agreement can be revoked by the bank loan modifications department. The chances of getting another loan will be impossible or nearly impossible, if you are late regarding your payments.

In regards to paying on time, there are sometimes incentives from the bank to accrue some of your payments and place them directly to your principal and give you credits(money) toward your payments over time, due to having your payments on time. These are great incentives and benefits for you making your payments in a timely manner, for your bank loan modifications.

Federal Loan Modification Program

The Federal Loan Modification Program approved by president Obama is designed to help prevent struggling homeowners from losing their homes. The Obama administration placed seventy-five billion dollars in a fund for homeowners that are underwater on their mortgage. This program can help homeowners who meet certain financial requirements refinance their mortgage where the owner can remain in their home and get a lower payment for the remainder of their mortgage. Being homeless is one of the most horrifying experiences a modern family can have happen to them and this program is designed to keep you and your family in your home.

What is the Application Process for the Federal Loan Modification Program?

You can expect a bunch of paperwork and a ton of headache if you decide to go it alone in getting a modification of your mortgage through the program. The rules are complex and the instructions are similar to trying to read a 30-page contract written by lawyers for lawyers. Unless you are experienced in finances, you would be well advised in seeking the help of someone who has years of experience in handling loan modifications. You will be required to produce identification, proof of income and your last income tax return.

Who qualifies for the Federal Loan Modification Program?

In order to qualify for the mortgage modification program, you must show serious financial hardship that will leave you no choice but to default on your mortgage. Additionally, your outstanding mortgage cannot be more than $729,750. Mortgages beyond this point will not be approved or refinanced through this program.

How Will the Federal Loan Modification Program Help Me Lower my Mortgage?

The federal refinancing program will help you lower your mortgage payments to a maximum of thirty one percent of your monthly gross income. This is achieved by a combination of lower interest rates and extended loans of up to forty years. Mortgage modifications are initially offered on a trial basis but permanent modification is guaranteed if you make your new mortgage payments on schedule for at least six months.

Take-Away for Federal Loan Modification Program Assistance

Filling out the paperwork can be a complicated procedure and probably best done by someone with a lot of experience in Mortgage Modifications. As long as you make your new mortgage payments on time you will remain in your home and own it free and clear at the end of the mortgage.

Yet Another Bailout Package for ‘Fannie Mae’ !

One of the renowned mortgage service provider company of US – ” Fannie Mae has requested for yet another bail out package of worth $ 19 billion from the Government. As due to increased unemployment and large defaults in sub prime loans company may not do well in future.

Yet Another Bailout Package !

If Fannie Mae gets this aid from government, then this would be their second aid package after march, 2009 when they received 15$ billion aid. Company  officials made it clear that this aid would not be enough to make company completed solvent. In addition officials added,  there are no assurances  for financial stability in future. If we look at the figures, Fannie Mae lost $23.2 billion in this financial quarter which is ten times when compared for  same period last year.

Government agencies seized America’s two leading mortgage companies in last september, and has already spent about $60 billion to stabilize two struggling companies. With this aid the combined aid amount to these struggling companies would reach $75 billion.

Fannie Mae and Freddie Mac played a important role in mortgage market. Together both the companies own about half of all American Home Mortgages.

Fannie Mae has suffered these huge losses due to default house loans in the recent housing bust.  As a result Fannie has $145 billion felonious loans, which are more than the 10 times last year.

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TALF – Ray of Hope for Mortgage Loan Seekers

The Federal Reserve today announced a new set of terms for the TALF – Term Asset-Backed Securities Loan Facility, which is Federal Reserve’s earliest lending programs, to include mortgage loan / loans into it.

TALF helps investors to buy consumer debt-backed securities, by granting them low-cost and short-term loans. These low-cost short-term loans lasts for three years and their main focus in on car loans, credit card loans and other small securities. Now in order to increase the investors in Commercial Mortgage-Backed Securities (CMBS), the Federal Reserve is planning to extend the term of these short-term loans to five years.

These five-year maturities will be in effect from June 2009 and will be used to finance asset-backed securities, primarily in the commercial mortgage-backed securities sector. According to Federal Reserve these loans could account for upto $100 billion, so the Federal Reserve has planned to keep evaluating the limit.

The commercial mortgage-backed securities market continues to stuck  on the belief of revival through the TALF program. Currently worth about $700 billion, it has suffered a sizable drop as triple-A bonds fell from 12% to 10% in recent months.

Reducing profits on current debt is essential to the government’s goal to kick-off new lending. This is because banks would not benefit from making new loans as long as investors can buy more secure CMBS for the same profit as compared inferior bonds.

According to experts, reviving the credit flow is crucial to the real estate industry, especially with another wave of mortgage debt coming due in the next few months.

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Loan Modification – Shadow Foreclosures May Slow Down Housing Recovery

Loan Modification – Shadow Foreclosures May Slow Down Housing Recovery

New hope over last month’s unexpected rise in home sales may be a bit premature, even with aggressive intervention from the government. Studies show that progress from new programs may be undermined by “shadow foreclosures”—foreclosed properties that remain unlisted and unsold, causing potential delays in market recovery.

RealtyTrac, an Irvine, CA-based foreclosure listing firm, reports that up to 700,000 foreclosed homes are not included in the multiple listing service (MLS). The housing inventory is currently pegged at 3.8 million properties, or close to 10 months of waiting at the present sales pace. With this shadow supply, however, selling is expected to take a lot longer, causing a further drop in prices.

Meanwhile, the number of delinquent mortgages has continued to rise in the past few months, although foreclosure rates have largely stabilized. Experts believe that most of these homes will eventually be foreclosed, and that lenders may be unaware of how shadow foreclosures can affect their balance sheets.

Richman & Associates, a Glendale mortgage restructuring firm, believes that lenders should be more proactive in mortgage assistance. According to Jim Richman, the company’s president and founder, lenders are simply waiting for government bailout rather than actively helping homeowners and organizing foreclosures.

A former banker and U.S. Department of Housing and Urban Development (HUD) commissioner, Richman adds that lenders may be violating current rules by not accurately recording these foreclosures. Regulators, on the other hand, hardly enforce these rules because more banks will fail and have to be bailed out.

Surveys with foreclosure attorneys also show that few, if any, of the firms in several states are doing formal appraisals. Thomas Barrack Jr. of Colony Capital, a private equity firm based in LA, believes that lenders have taken to waiting for new programs every week instead of taking action.

Moe Bedard, president of Loan Safe Solutions, believes that some of the shadow supply comes from a “gray market” of foreclosures sold through in-house divisions. Lenders may also be privately selling defaulted documents to investors. However, he says, these cannot make up the entire supply of unlisted properties.

Banks cannot let go of these properties in one go, as it could drastically reduce prices in the most hard-hit communities. Home prices have already dropped as much as 30% in some communities, and experts say they can fall even further. Some areas may need to drop another 30%, says, Barrack, just to get back to normal levels from 1998.

Investors Demand Changes in Obama’s Housing Plan

Several mortgage investors have urged the government to amend its $75-billion housing rescue plan. The investors, who collectively hold billions of dollars in securities backed by residential mortgages, said the legislation violates some of their rights and that they are considering legal action.

The investors have met repeatedly with Treasury officials but are still unsatisfied with the plan. According to them, certain measures in the bill prevent them from filing lawsuits against the servicers responsible for collecting payments and granting loan modification. Read more here

First Horizon Loan Modification

First Horizon Loan Modification

First Horizon is a leading financial services company operating in Texas and Tennessee. Established in 1864, it is one of the top 30 bank holding companies in the United States. Like most regional banks, its major products include sub-prime mortgages to less-than-ideal borrowers, and mortgage assistance to help these borrowers stay on track. Many First Horizon borrowers are particularly interested in loan modification. This process involves negotiating better terms with the bank to help them avoid foreclosure. A First Horizon mortgage modification also stops the foreclosure process, giving borrowers enough time to get back on track while working things out with the bank. To qualify for a First Horizon loan modification, one has to prove that he or she has a stable income and a valid reason for falling behind. The latter has to be stated in a hardship letter explaining their financial situation. Valid hardships include medical emergencies, job loss, demotion, military service, or a death in the family. Although it’s technically possible to get a loan modification on one’s own, it’s best to hire a loan modification attorney. A lawyer can ensure faster response from the bank and use lending laws to give the case more leverage. If the mortgage modification isn’t granted, they can also discuss alternatives such as a short sale, forbearance, or deed-in-lieu.