subject: Mortgage Loan Mod 101 [print this page] Struggling to pay your home loan? You are in good company as millions of folks continue struggle financially. Credit Scores are at an all-time low. Foreclosure rates are at an all-time high. It is not pretty. And our best solution? Well, it's still loan modification - however flawed and temporary - that hold the most promise for U.S. Homeowners.
Let's review. Mortgage modifications, a reduction in monthly payment via an interest rate cut or an extension of term, has been the primary method the government and banks have used to slow the foreclosure rate. Many homeowners are pleased to remain in their homes, even though the home has declined in value well below the mortgage amount, as long as the monthly payment is "inline" with current values or local rental alternatives.
Loan Mod applications pour in daily. Many banks receive more than 10,000 applications per day. The deluge has led to enormous backlogs. Many times it's simply impossible to get through to your bank on the phone. One bank actually has a recorded message they are only available 3 hours per day!
The HAMP loan modification program holds the most hope of any modification program. It's simply head and shoulders above all other programs. The only problem? Qualifying isn't always easy.
Requirement number 1: The loan must be less then $729,000 and made prior to January, 2009.
Next, the borrow must show a hardship. Normally this is not a problem and the hardship requirements are not strict. The intent here is simply help folks who need help (verses folks who would simply like to pay less)!
Of course, the programs can only help folks to a certain degree. That is, homeowners must still have enough income to make most of their current payment.
All this is paid for by $75 billion from the U.S. taxpayer. Participating banks receive compensation when they grant loan mods.
The application process is relatively simple and straightforward...sorta' like doing your taxes - NOT! It is arduous but it can be done with a little help from an experienced adviser. Tons of support material is available from the banks and from the government and their endorsed non-profit associates. Smart applicants will also avail themselves of support from a reputable, experienced, private, for-profit source.
by: Edmundo A. Jastremski
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