A DECEMBER 10TH, 2008 CNNMONEY.COM ARTICLE ON A CONTROVERSIAL FDIC LOAN MODIFICATION BILL GIVES OVER 1.5 MILLION HOMEOWNERS HOPE!
WOW, it’s about time the government started taking measures to ensure LOAN MODIFICTION PROGRAMS. A recent CNNMoney.com article talks about how FDIC chairwoman Sheila Blair’s LOAN MODIFICATION PLAN is getting some support from Democratic lawmakers. Even though the Bush administration is refusing to enact the bill, once the new Congress takes office next year, the bill should gain momentum! AdjustMyLoan.com obviously has been BIG proponents of government ensured LOAN MODIFICATION PROGRAMS because we believe the biggest hang up when negotiating LOAN MODIFICATIONS has always been the bottleneck that occurs when loan service providers have to ask investors (those that actually own the notes) permission to modify terms. In most instances your mortgage company doesn’t even own the loan they are servicing. Instead, your loan was packaged and sold on Wall Street as a Mortgage Backed Security. The problem occurs when you begin to default on your loan, need a LOAN MODIFICATION, and call your lender for help. They send you out some paperwork, and you fill it out immediately and send it back in. As the months pass you by, you become frustrated at how slow the process is and the lack of organization your lender displays. What you don’t know is that your lender has to ask the investor permission for the modification, and this is actually stalling the process. The investor has little incentive to modify the loan and would rather foreclose to write the bad loan off their books. With government backing, LOAN MODIFICATIONS should be an easier / faster decision, and many more homes can be saved. This is just the incentive the investor would need to choose LOAN MODIFICATION over FORECLOSURE! Below is some experts from the article that you should read:
Bair’s guarantee plan
With Treasury Secretary Henry Paulson giving little more than lip service to Bair’s plan, the chairman unveiled its details last month.
First, housing payments for delinquent borrowers two months or more late would be reduced to 31% of gross monthly income. To get there, mortgage rates could be set as low as 3% for five years, before increasing at an annual rate of 1 percentage point until they hit the prevailing market rate. Loan terms could be extended to as long as 40 years.
Each loan will be tested to see whether it is more beneficial to modify or to foreclose.
Second, to encourage servicers and investors to participate, the government would share up to 50% of the losses if a borrower who had been helped ended up in default anyway. The risk of re-default had been one obstacle to getting lenders on board with systematic modification plans. This guarantee takes the program a step further than what’s currently being done.
In addition, the FDIC would pay servicers who process mortgages $1,000 for each re-worked loan.
At a national housing forum this week, Bair reiterated how important it is to step up the pace of loan modifications. There are likely to be 2.25 million foreclosures by year’s end, Bair said, citing statistics from Federal Reserve Chairman Ben Bernanke. Usually, there are only 800,000 to one million.
“We are falling behind the curve,” Bair said. “We are way above where we need to be. There are a lot of unnecessary foreclosures going on that can be prevented through more aggressive loan modifications.”
Currently, we have been getting two type of modifications for our clients. Temporary LOAN MODIFICATIONS, and permanent LOAN MODIFICATIONS. Our temporary LOAN MODIFICATIONS typically place any arrears the homeowner has (missed payments and late fees) on the back side of the loan. A temporary interest rate of 2-3% is implemented for a period of 1-5 years. Our permanent LOAN MODIFICATIONS also place any arrears on the back side of the loan and the homeowner receives a permanent interest rate of 5-5.5%. We have also been extending out the length of the loans as long as 40 years and getting PRINCIPAL BALANCE REDUCTIONS for those that have large second liens or PREDATORY LENDING VIOLATIONS on their loans. We have seen monthly payments drop anywhere from a few hundred dollars a month to over $1700 a month.
These are typical LOAN MODIFICATIONS we have done and are not guaranteed…(nor is there a promise to stop your foreclosure). Each homeowners situation is unique and our FREE LOAN MODIFICATION CONSULTATION reveal if you pre-qualify for any of our programs. DON’T WAIT UNTIL IT IS TOO LATE! DON’T WAIT FOR YOUR LENDER TO REACH OUT TO YOU. DON’T LET YOUR LENDER DICTATE THE TYPE OF MODIFICATION YOU RECIEVE. WE FIGHT FOR YOUR MODIFCATION AND GET YOU THE BEST LOAN MODIFCATION TERMS POSSIBLE! Our professional LOAN MODIFICATION NEGOTIATORS will audit, package, propose, and negotiate a LOAN MODIFICATION on your behalf. Visit our LOAN MODIFICATION WEBSITE or call us today.
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