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What You Need To Know About Loan Modification

by Victoria Attanasio (writer), Santa Clara County, February 24, 2009

Credit:

It is helpful to use "their" language when you call the bank to say "HHHHEEEELLLLPPPP!".

Your lender calls this "loan workout". And banks are slowing figuring it out. A year ago, banks did not have a process for short sales, now they do and things are running smoother. Now, modification is the uncharted territory.  Modification is not always an option, sadly the statistics are not good. Within 6 months, 58% of homeowners who received a modification are in default, which means headed for short sale or foreclosure. The reason for this...banks are for the most part not yet processing principle reductions when they modify a loan.  Here is what banks can do today: halt a rate adjustment or offer a payment "vacation" (just a delay, the amount of the delayed payments is just added onto the back of the loan).  If there has been a reduction in income but not a loss of income then a modification may be the ticket. The best approach with the lender is to communicate, what you can afford for the monthly payment and then let the lender go through their internal processes to get you to that point or close to it.  Banks/lenders don't want you to lose your home or stop being their customer. They want you to be able to borrow money from them again...that's their business.  With recent legislation, they are feeling the pressure to work with homeowners and not against them...yes Change is a Good Thing!   And remember, just because they say "No" doesn't mean you can't ask again...and again...and again...that's negotiation, and it is a lost art, one that is due to be rediscovered. 


About the Writer

Victoria Attanasio is a writer for BrooWaha. For more information, visit the writer's website.
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4 comments on What You Need To Know About Loan Modification

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By yoko ducked on February 24, 2009 at 09:52 am

thanks victoria for some good news.

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By Victoria Attanasio on February 26, 2009 at 10:11 am

Thanks for the great letter Craig.  I am hopeful we see lenders forced into doing what I as a REALTOR am compelled to do by nature, keep people in their homes when possible.  It seems like every day I get a call from a client or someone they know who needs help and that means not selling a home but helping them to keep their piece of the American Dream.  Thank you for the referral of Treva Hearne, I appreciate it and I am sure some of my clients will also.

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By Victoria Attanasio on August 02, 2010 at 07:32 pm

JKO, I share your frustration. Banks have not yet wrapped their head around what needs to happen with modifications. There are some banks that have internal modification products but there are some pitfalls that make this a slippery slope:

1) If it is a "trial modification" make sure you can afford the temporary payment and still pay down your debt. That way when it comes to final approval your debt to income ratio is better than before, otherwise, you just paid money to extend the agony and you will not have that extra reserve in the bank.

2) Check out rents in your area, if your modified payment is comparable to what you would pay in rent, it is a good because then you still get the mortgage interest deduction.

3) Ask your banks about principle forebearance...it resembles a balloon payment at the end of the loan term but by the time we hit 30 years...hopefully you'll have some equity, if not, you might be at a break even point...don't mean to be flip, but that is the nature of our market in the bay area right now.

Thanks for the comment.

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By Just Average Joe on August 24, 2010 at 08:12 pm

And the foreclosure nightmare just continues. Horror story of one of my poor real estate clients:

FACT: America is still a Free Speech Zone isn't it? U.S. Constitution and Bill of Rights and all that good stuff.

OPINION: our opinion is part of our guaranteed Free Speech: What Bank of America and Impac Mortgage did to us was a horrible scam that was financially and emotionally devastating to my family and I.

FACT: I only got any response back from Countrywide Mortgage now with Bank of America after I contacted Democratic U.S. Senator, NV, Harry Reid after Republican John Ensign's office and Republican Dean Heller's office did nothing for me after I contacted them for help with Countrywide Mortgage now with Bank of America who was somehow just not doing the legally required since Summer 2005 loan modification for us.

FACT: The written response I got back from Lorraine Raymer of then Countrywide Mortgage now with Bank of America was I "needed to be more patient with her industry and there was nothing Countrywide Mortgage now with Bank of America could do for me in spite of the legal requirement to do so since Summer 2005." We later got the same insipid response from Bank of America's James Emerick of Bank of America CEO Brian Monyihan's office.

FACT: Less than 24 hours after that I starting getting hourly phone messages, tag teaming me, from Jason Curry and Steve Curry of Impac Mortgage who were "calling to offer me this great deal since Impac Mortgage was the holder of my note, the owner of my note, the investor of my note," the story was always the same hour after hour after hour of messages from Jason Curry and Steve Curry of Impac Mortgage. Yeah, it's a scam. It was all a scam. It was all a thorough scam. It was all a well thought out scam.

FACT: The written approval we fell for from Impac Mortgage, Joseph R. Tomkinson, Ronald Morrison, Steve Curry, and Jason Curry turned out to be worth nothing.

FACT: We paid Impac Mortgage based on their written approval they gave us. Impac Mortgage did cash our check. Impac Mortgage then did not deliver on their written approval to us.

FACT: Then we find out Impac Mortgage was never and isn't the holder of our note, the owner of our note, or the investor of our note.

FACT: Nor did Impac Mortgage defer our next two payments as their written approval promised they would.

The mortgage industry was regulated and it was well-regulated until Pres GW Bush stepped in and stopped the enforcement of the existing very good regulations.

Since summer 2005 Uncle Sam says Home Loan Modifications are the required way to avoid foreclosure, but the mortgage lenders are NOT willingly doing them. Why?

Home borrowers are facing foreclosure that shouldn't be.

Home loan lenders are NOT doing the REQUIRED Note Modification. Instead, irrational lenders are illegally doing Foreclosures and Short Sales in violation of the rules.

The required immediate Note Modification gives homeowners time until the housing market recovers, the economy recovers, homeowners' credit can start being repaired to its previous flawless condition, and do NOT add to the already bloated for sale/rent housing inventory. That's why HUD, Freddie and Fannie had their foreclosure mitigation requirements, and Congress and the President signed foreclosure mitigation legislation into law -- years ago!

Check out Just Do The Required Home Loan Modification.

FACT: NV AB 149 FURTHER Requires Home Loan Modifications

Nevada legislators finally got fed up enough with the lenders illegal foreclosures and did something.

FEBRUARY 9, 2009

Nevada ASSEMBLY BILL NO. 149 establishes additional restrictions on the trustee’s power of sale with respect to owner-occupied housing by providing a homeowner with the right to request mediation under which he may receive a loan modification. Once a homeowner requests mediation, no further action may be taken to exercise the power of sale until the completion of the mediation. Each mediation must be conducted by a senior justice, judge, hearing master or other designee pursuant to rules adopted by the Nevada Supreme Court or an entity designated by the Nevada Supreme Court.

FACT: We requested this required mediation and compliance pursuant to NV AB 149. We did it in writing through Republican U.S. Representative Dean Heller's office. Bank of America and Impac Mortgage refused to meet with Lance Allen, our chosen trained mediator with Neighborhood Mediation Center (NMC). In 1997, Nevada legislation was enacted to impose filing fees to fund this Neighborhood Mediation Center (NMC) in Washoe County, Nevada . The NMC can handle any type of dispute and is designed to provide conflict resolution services, including mediation, conciliation and referral services, at no charge, within Washoe County. Yet somehow Bank of America just didn't care and they refused to comply with NV AB 149. Republican U.S. Representative Dean Heller's office did not care that Bank of America refused to comply with this NV law and several other laws.

FACT: Bank of America (and their what certainly appears to be their very close partner Impac Mortgage) never complied with NV AB 149. They just slapped an illegal Notice of Default on our home and there it illegally remains to this day.

FACT: In Nevada all these loan mods have to be approved by the Nevada Mortgage Lending Division. We found this requirement out only after the fact. The Nevada Mortgage Lending Division never approved our Impac Mortgage approval from Jason Curry and Steve Curry because Impac Mortgage, Jason Curry and Steve Curry are not registered as they are legally required to be.

FACT: Like the Nevada mortgage fraud where the Nevada Mortgage Lending Division ended up enabling the vast amount of it, the same is happening now for the foreclosure fraud. The Nevada Mortgage Lending Division is again asleep at the wheel. Why is that Sheila Walther and Mendy Elliott and Jim Gibbons?

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