Streamlined Loan Modification Program
Fannie Mae, Freddie Mac, Hope and the Federal Housing Finance Agency recently announced the new Streamline Modification Program (SMP) devised to assist homeowners in stopping foreclosure.
The qualifications for entry into this program are as follows:
The homeowner must meet certain criteria to be eligible for the new loan modification program. To begin with, the mortgage must be taken out before January 1, 2008 and the principal must be equal to or greater than 90 percent of the home’s market value, it must be a single-family residence or a condo and the homeowner’s primary residence.
In addition, the homeowner must be three months or more late on the mortgage payments, which are greater than 38 percent of the gross monthly income. The income must be verifiable and the homeowner needs to show financial hardship.
IF the homeowner meets the above criteria, they might qualify for assistance.
What if you do not meet all the requirements? That’s when a forensic loan audit needs to be performed to ensure they were put in the right loan for their needs, that they weren’t taken advantage of and the loan is a fair and just match for that homeowner.
Our Attorneys and loan auditors have a trained eye for mortgage violations. You need a forensic loan audit to detect evidence that can be used when negotiating with the loan servicer for a loan modification.
Basic Modification Guidelines
1. The borrower must show a legitimate hardship. Here are some of the hardships:
a. A decrease of pay and/or hours
b. Job loss
c. Illness
d. Payment increase
e. Payment adjustment
f. Miscellaneous
2. Current loan information- The current interest rate is important. The lender will look at whether the loan is a fixed or adjustable rate. If your borrower is in a low fixed rate mortgage, the likelihood of modification is slim, but possible. An adjustable rate that will not adjust for some time will also be looked at very closely if it is very low. However, if they don’t qualify for a loan modification, chances are they will for a deed in lieu of foreclosure/short sale.
3. Employment information- If the hardship is a decrease of pay with current employer, then document what the borrower is doing to supplement their income is helpful.
4. Credit/expenses- Add up all borrowers expenses. If the current PITI plus all expenses surpasses income, then the lender may state that the borrower can not afford the home and a deed in lieu of foreclosure not a loan modification is the option. Note: Borrowers’ who have two and three car notes, high credit debt with high monthly payments, may want to consider not paying their debt to be able to afford their loan modification after it is completed (ability to repay). Again, the income must be able to cover the monthly expenses; especially the PITI.
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Loan Modification
Loan Modification is a permanent change in the terms of your existing loan. Lenders may restructure your loan by a reduction in the interest rate, an extension of the length of the loan, a lowered principal balance, reduction in the amount of accrued back payments or late fees, as well as many other options to allow you the affordability to pay your mortgage.
If you are behind on your payments, struggling to make your payments, expect an adjustment that will cause you to fall behind, you are facing foreclosure, or fear foreclosure is just around the corner- then you are a candidate for loan modification.
The Loan Modification process usually takes 30-90 days, and consists of many long phone calls and negotiations. Loans Modified America will handle every aspect of your negotiation and prepare a comprehensive loan modification package for your lender, including but not limited to:
Financial Prospectus Workout – Detailed to include all income, assets, and all payments you make, down to every cost, including Gas! This allows a realistic view of your financial abilities to be sure you can continue to make your home payments for years to come once your loan is restructured.
Unlimited Negotiations with your existing lender and/or their attorneys.
Loan Restructuring Proposal – Loans Modified America requests specific terms for your new loan. Our request is carefully discussed with you so that you are happy with your new loan.
Representation on your behalf in dealings with your Lender
CMA - Comparative Market Analysis of your home
Pulling of Credit Report
Full Time, one-on-one customer service for your Status Updates
Loans Modified America may request modifications in the following ways, however other options may be used to lower your monthly payments:
- a) Request Adjustments, elimination or repayment plans on any delinquent and past due balances.
- b) Request current and future rate of interest charge and monthly payments to be lowered
- c) Request loan balance amount to be less than current loan (lowering your principal balance)
- d) Request Loan to be converted to a longer fixed term
The goal is to get you back on track, current on your payments, and to keep you in your home for years to come.
Can't I do this myself? Why should I pay someone else to do it for me?
Of course you can negotiate with your mortgage company yourself. Just as some people act as their own accountants or legal representation, some people are knowledgeable enough about mortgage delinquency that they are comfortable negotiating with their mortgage company.
However, for others phrases like "partial claim", "loan modification" and "special forbearance" are intimidating and confusing terms. People in this category may find dealing with their mortgage company to be a dehumanizing experience as they are shuffled along the assembly line-like process, never sure if the representative they are talking to is truly looking out for their best interests or merely trying to meet their quotas while attempting to keep their talk time low.
Loans Modified America doesn't offer any service to you that you cannot technically perform for yourself. Then why pay us to represent you? There are many reasons we could provide but perhaps an example would be more effective:
When you are on the phone with your mortgage company and they tell you there is nothing that can be done for you, how do you know if this is the truth or if it is simply what the representative chooses to tell you as a result of their inexperience or apathy? These representatives aren't sitting in an office of their own, thinking about what a great career they have. The mortgage company representatives you will deal with work in call centers- a low-paying, high-turnover field of employment. Our negotiators have more experience in mortgage retention than most any of these representatives, do you?
How many financial transactions are as important to the average person as their home? Much like in any important matter, having the proper guidance and representation can make all the difference in the world. It can save you time, trouble and money.
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