Mortgage Finance Blog

Loan Modifications

April 3rd, 2009 8:28 AM by Diego Quintero

Hello Everyone! I would like to thank you for allowing me to remain in-touch with you. This blog now reaches over 1000 people, nationwide. This is a great way for us to exchange information and opinions. Additionally, it is the best way for you to be informed about the mortgage and real estate industries. I hope that you are learning something each time that you read the blog. As always, I am available for your comments and suggestions. Please feel free to add comments online- whether or not you agree with my point of view. I look forward to hearing from you.
This week's blog is about loan modifications. Interestingly, it is not a service that my company provides. But if you are a homeowner you need to know about this as it may be a program that can save you a lot of money. The program has been popular over the last couple of years with mortgage brokers and attorneys all across the US. However, everyone who has been involved with brokers and attorneys probably paid a lot of cash and the results were subpar, at best.
The government recently released the guidelines to the "real" loan modification program. I would recommend that all homeowners  take some time to determine whether or not you could take advantage of it. Typically, I am opposed to anyone walking away from any debt. I believe that everyone should comply with any financial agreement. In this case, however, everyone else is benefiting from it. Why not give it a try? After all, the benefits could be quite substantial.
The website to visit is www.financialstability.gov. Download the 17-page file and take the time to review it. It can be worth tens of thousands of dollars over the life of your loan or hundreds of dollars in monthly savings. On April 6th, the banks will begin to take-on the applications of internal clients. This means that if you wish to include counsel, feel free to do so. But, you could feasibly take care of the loan modification directly with your mortgage servicing company for FREE. According to the literature, they may be able to reduce your principle loan amount, reduce your interest rate, and even eliminate any junior liens (second mortgages,etc) that exist on your title. Go visit the site and see if it works for you and your family.
Now, time for my personal opinion on the matter. While it provides a true benefit for the people who are in precarious equity positions- I think that it is a serious slap in the face for people who have extra assets or decided to buy their homes with a substantial down payment. Unfortunately, they are now at a break-even position with their mortgage and value and may not qualify for the savings. Those with too much in their asset accounts - SORRY! You don't get to be a part of it, either!
Is it fair for people to be eliminated from the program because they did the right thing or because their investment accounts are a little better than others? Where's the equality in the approval process? We do not know the actual cut-off for those individuals as of yet. We should find out just within a few weeks following the April 6th start date. Stand-by for some irate homeowners who will feel cheated by the very system that they helped sustain through the hardest economic times. Let's hope that we don't get into a deeper hole because we have some influential people who want to make a bold statement against the system. I don't think anything will happen, but can we assign blame if something does take place?

 

Posted in:General
Posted by Diego Quintero on April 3rd, 2009 8:28 AM

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