Why loan modification?
Modifying your existing loan is by far the most cost affective way to lower your interest rate. A traditional mortgage refinance can cost as much as 6% of the loan amount. As an example, on a $200,000 mortgage in Dallas / Fort Worth, Texas you could be responsible for as much as $12,000 for closing costs and this does not include other ancillary fees or charges that could include; closing costs, attorney fees, points, appraisal fee, prepayment penalties of your current mortgage.
How’s your credit score? What about your income?
With loan modifications your credit score and income are non-issues. Honestly, if you’re in a mortgage with a high interest rate and/or you executed a zero down loan you’ve either been taken advantage of or your credit was or possibly is an issue. As long as you are employed or have the ability to pay a reduced mortgage payment, loan modification is for you!
The timeframe to complete a modification varies and could be as quick as 30-45 days to a few months; depending on the lender.
Massive Foreclosure Plan Unveiled
Homeowner Affordability and Stability Plan unveiled by Obama administration
February 18, 2009
By MortgageDaily.com staff
The Obama administration plans to throw $75 billion at the country’s foreclosure problem. As many as 9 million mortgages could be impacted, including conforming loans that have been paid on-time and at-risk mortgages. The plan — which could be a boon for laid-off mortgage employees — includes loan-to-value exceptions on conforming refinances, bankruptcy cramdowns and cash payments for successful modifications.
The Homeowner Affordability and Stability Plan was announced today by the U.S. Department of the Treasury. The program starts on March 4, at which point details about eligibility will made available.
The Treasury indicated that 4 million to 5 million borrowers with LTVs between 80 and 105 percent who have made on-time payments on loans managed by either Fannie Mae or Freddie Mac will be able to refinance to at today’s lower rates. Borrowers with second mortgages are eligible as long as the first mortgage doesn’t exceed 105 percent.
In addition, the plan includes a $75 billion initiative to support modifications that lower mortgage payments for between 3 million and 4 million at-risk borrowers primarily with subprime and exotic loans. Only owner-occupied one- to four-unit properties will be eligible. Borrowers who have paid as agreed but are at risk of imminent default will also benefit from this initiative.
“Homeowner Stability Initiative has a simple goal: reduce the amount homeowners owe per month to sustainable levels,” the Treasury said. That goal will be reached by first requiring lenders to reduce the interest rate or loan balance to a level that brings the debt-to-income ratio down to 38 percent. The government would then match further reductions by lenders so that the ratio is reduced to 31 percent. The rate can be gradually increased again after five years to conforming rates at that time.
Servicers will receive a $1,000 up-front fee for each qualified modification completed and $1,000 each year for up to three years as long as the modified mortgage remains current. In addition, if the modification is completed before the loans becomes delinquent, the servicer will receive a $500 incentive and the mortgage holder will receive a $1,500 incentive.
Borrowers will also receive a $1,000 reduction to their principal balance each year they stay current for up to five years.
The Treasury will work with the Federal Deposit Insurance Corporation to create a $10 billion fund to subsidize lenders for losses on modified loans if home prices decline. This move is designed to eliminate the motivation for servicers to foreclose sooner because home prices might fall further.
Using the FDIC’s streamline modification program as a template, the Treasury said it will develop uniform modification guidance for the foreclosure prevention plan. The guidelines will be mandatory at government agencies, government sponsored enterprises and any financial institutions that receive future federal assistance.
The Treasury said it also hopes to impact foreclosures by allowing judicial modifications of mortgages for bankrupt borrowers with no other options and by improving the flexibility of the Hope for Homeowners program.”We must stem the spread of foreclosures and falling home values for all Americans, and do everything we can to help responsible homeowners stay in their ho,” President Barack Obama said in a statement posted on the White House’s Web site.
The nation’s financial institutions support foreclosure prevention.
“We agree with the emphasis on support for preventing foreclosures, as we have previously testified, since housing and foreclosure issues are still at the core of our economic problems,” the American Bankers Association said in a statement Tuesday. Mortgage bankers were unhappy with the lack of help on loans with LTVs above 105 percent, the exclusion of jumbo mortgages from the plan and inadequate safe harbor for servicers, a statement from the Mortgage Bankers Association said. The cramdown provision also disappointed the trade group.
“In the end, we all agree with the overarching goal of helping at risk borrowers get an affordable monthly mortgage payment,” MBA President and Chief Executive Officer John Courson said in the statement. The Treasury’s program will utilize funds from the Troubled Asset Relief Program and rely on the “the full strength of Fannie Mae and Freddie Mac.”
As a result of the Homeowner Affordability and Stability Plan, mortgage companies will shift salespeople to loss mitigation departments, management consultant and analyst Dr. Danielle Babb told MortgageDaily.com in a statement. She is the Dean for Andrew Jackson University School of Business and is also a foreclosure and online business professor at the University of California, Irvine.
In addition, Babb noted that many former employees with refinance experience will be rehired. She said employees will need to retrained to understand the new rules.
The plan is also expected to increase demand for mortgage-backed securities — pushing prices higher, Babb said. The stock market stood firm after the plan was announced, with the Dow Jones Industrial Average more than 10 points higher in late trading after being down more than 70 points earlier today.
Items necessary for Loan Modification:
- Proof of income (1 month): This could include W2’s, pay stubs, rental agreements or bank statements
- Hardship letter (explain what happened that made you fall behind)
- Most recent mortgage statement and all closing documents that you can provide.
- months of bank statements
- Last year w2’s
- Tax returns for last two years, the first 2 pages only, form 1040
- Monthly Expense Sheet
- (all expenses even if you are not paying them: including utilities, food, mortgage payments)
- Completed Budget Form
RMCN Credit Services, LLC helps clients that need their mortgage loan modified by doing a forensic audit on the lender. Our “V” Phase Process allows us to create a personalized solution that enables you to save your house and avoid foreclosure.
I Phase – Forensic Mortgage Audit
Our professional auditors do a forensic mortgage audit on all of your closing documents to determine if there were any violations of the following:
Real Estate Settlement Procedures Act (RESPA)
Home Mortgage Disclosure Act (HMDA)
Federal Housing Administration (FHA)
Consumer Handbook on Adjustable Rate Mortgages
Information Disclosure Authorization
Equal Credit Opportunity Act (ECOA)
Truth in Lending Act (TILA)
Homeowners Protection Act (HOPA)
II Phase – Evaluation & Determination
At this point a determination is made on what the best plan of action will be. Clients will work closely with our Auditing Teams to verify that all audited information is correct and how to proceed.
III Phase – Lender Notification & Negotiations
We notify the lender that we are representing you and present them with the violations and current situation. This puts the lender in a subordinate position and enables us to maximize the leverage from the audit to negotiate on your behalf and avoid foreclosure.
IV Phase – Proposal & Solution
After the negotiations are complete we will make a proposal to the lender. Upon acceptance, we will get approval from the lender’s Loss Mitigation Department.
V Phase – Resolution
When all documents have been executed, we will file them with the lender and your loan will be been modified preventing your home from being foreclosed.