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Are Loan Modifications Permanent?

June 28, 2011 Leave a Comment

Recently, Kevin Hardin at Thomson Law revealed 7 secrets about Arizona loan modifications that most people won’t tell you.  If anyone could explain the ins-and-outs of loan modification, I think Kevin can – his firm has helped thousands of Arizona residents understand the process of getting an Arizona loan modification over the past couple of years.

Permanent Loan Modifications Not Permanent?

Here is the #2 secret Kevin revealed about loan modifications – permanent loan modifications are not permanent.

Highlights in the video include:

We hear in the news about getting a trial mod.  Lenders will get you on the phone, tell you they understand that you are behind on your payment and then offer for you to pay $600 a month for the next three months while they get all the paperwork “taken care of”.

The problem with this is that it is a trial loan modification and there are no contracts that you have signed, there are no legal documents and after a six month period and you end up getting denied, you are going to be very upset.

Hardin further goes on in the video to talk about what happens if you actually get a “permanent” loan modification.

Let’s say that you actually get awarded a “permanent” loan modification. You are excited and think that you finally got your permanent loan modification.  Well, it is not permanent.  When you read the loan modification documents, you are going to find that your new interest rate is going to start at something like 2 or 3 percent — for the first year. Then after another year, it goes up another percent.  Until it gets to a market rate – and let’s say that market rate is 5.5%.   At that point, it is going to be a fully-amortized payment (PITI) and so you want to ask yourself today: could you afford a fully amortized payment on the home you own today.

Odds are, you probably can’t.

Which means with a loan modification situation like this all you will have achieved is to get a very temporary solution to a permanent problem.

Have more questions about loan modifications? Contact the Arizona loan modification experts.

Thomson Law PLC
2701 East Camelback Road, Suite 150
Phoenix, Arizona 85016
602.774.3757

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Thomson Law: Phoenix Arizona Loan Modification Attorney

December 17, 2010 1 Comment

Here in the Phoenix metro, many areas have seen property values go down by 50% or more. And sure, there are plenty of real estate agents who are more than happy to help you with your short sale.

But did you know that there are legal risks associated with a short sale / loan modification / foreclosure that your real estate agent may not even be aware of.

Which is why it would be wise (very wise) to speak with an experienced loan modification / short sale attorney who can assist you with a legal strategy to mitigate the risks for both you and your Realtor.

Enter Thomson Law in Phoenix.

Thomson Law: Phoenix Short Sale Legal Experts

Just a small excerpt about Thomson Law that speaks directly to some of the things they have done to help their clients:

How Do You Define Experience?
Is it simply discussing the close ratio of a short sale? Is it the number of listings? Is it the degree of difficulty? Not really, as everyone deserves professional representation from simple to more complex. The problem with that, is there are many short sales that should never have closed because the sale failed to satisfy the seller’s true objectives or created an increased liability for the seller to his or her lenders…

Thomson Law has maintained the view that the true evaluation of experience is “Did the client receive the guidance that had their best interests in mind”. Thomson Law believes it has done so. Thomson Law attorneys are AV rated, the highest peer rating, from Martindale-Hubbell with more than 20 years of experience in Arizona real estate and mortgage lending. Still many have wanted to know what we have done lately.

To date, no client of Thomson Law has received an adverse decision awarded against them by a court for deficiency liability. But that really does not begin to tell the whole story.

Thomson Law has never really publicized what the Mortgage Mediation practice group has accomplished over the last two and a half years. The firm is very proud of the results of this practice group. The Mortgage Mediation practice group has focused on assisting homeowners and real estate agents with their short sales and or retaining their homes when faced with a point where they can no longer afford the current mortgage. Keep in mind, we are retained in a minority of situations as we provide our services to the real estate industry at large.

Since August of 2008 the accomplishments of the Mortgage Mediation Group are as follows:

  • Our staff has fielded over 8,000 incoming phone calls from distressed homeowners.
  • We have averaged over 16 consultations a week for a total of 2018 consultations with homeowners that are having difficulty paying their mortgage.
  • Of those clients 719 have retained our Mortgage Mediation services beyond the initial consultation.
  • The 719 retained clients represent $235,034,092 in total resolved residential mortgage debt. This number does NOT include ANY bankruptcy work.

If you are one of the many homeowners in Phoenix who has seen their property value plummet and are considering your options, it would be wise (very wise) to speak with a legal expert who can help you prepare for the road ahead.

In my experience, there is nothing more expensive than cheap legal advice.

And if you don’t believe me, just ask those people who have their lenders chasing them down after a short sale for the deficiency.

Contact Thomson Law:

Kevin Hardin
THOMSON LAW PLC
2701 East Camelback Road, Suite 150
Phoenix, Arizona 85016
602.774.3757
602.840.3290 Fax
[email protected]

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Short Sale, Trustees Sale, Loan Modification: Luck Is The Difference

June 27, 2010 Leave a Comment

Having short sold my house earlier in the year, I happen to be an expert on what it is like to short sell your house.

And I am an expert on what it takes to get it done.

And I have come to the conclusion that the difference between a short sale vs. a trustees sale is…

Luck.

But if you find yourself in the position where you are going through a trustees sale here in Arizona, here is a great video of someone else who has went through the same thing:

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Short Sales and Loan Modifications: Home Affordable Foreclosure Alternatives Program (HAFA)

February 11, 2010 1 Comment

Home Affordable Foreclosure Alternatives Program (HAFA)

On November 30, 2009, the Treasury Department released some exciting news and requirements for its new Home Affordable Foreclosure Alternatives Program (HAFA). As part of the Home Affordable Modification Program (HAMP), HAFA is set to assist distressed homeowners obtain pre-determined short sale agreements that will enable both buyer and seller (banks) to sell the property quickly compared to today’s traditional short sale process, which often times is long, drawn out and not always successful in closing.  Thus foreclosing on the property.

The HAFA program intends to provide incentives in connection with a short sale or a deed-in-lieu of foreclosure (DIL) used to avoid foreclosure on a loan eligible for modification under the HAMP program.  What this means for the distressed homeowner?  Let’s explore what this looks like.

  • Homeowner applies for a Home Loan Modification
  • Lender reviews the loan modification packet
  • Homeowner does not qualify for modification
  • Upon declination of the modification request, Lender counter offers the modification with an approved short sale agreement
  • Homeowner finds an agent to list and market the property immediately
  • Buyer makes offer to homeowner and closing can occur within 30 days of contract acceptance (This is faster than the 3-6 month wait time with traditional methods)

Servicers participating in HAMP are also required to comply with HAFA. A list of servicers participating in HAMP is available at MakingHomeAffordable.gov.

HAFA applies only to loans that are not Fannie Mae or Freddie Mac. They have plans on releasing their own versions of HAFA in coming weeks.

HAFA is a complex program, with over 40 pages of guidelines and forms It is designed to simplify and streamline the traditional methods of short sales and deeds-in-lieu of foreclosure.

A brief overview of what to expect with HAFA:

  • Compliments HAMP by providing a fast and effective alternative for the current homeowners who are HAMP eligible or ineligible but nonetheless unable to keep their home.
  • It utilizes the borrower’s financial and hardship information already collected in connection with consideration of a loan modification.
  • Allows borrowers to receive pre-approved short sales terms before listing the property (including the minimum acceptable net proceeds).
  • Prohibits the servicers from requiring a reduction in the real estate commission agreed upon in the listing agreement (up to 6 percent).
  • Requires borrowers to be fully released from future liability for the first mortgage debt (no cash contribution, promissory note, or deficiency judgment is allowed).
  • Uses standard processes, documents, and timeframes/deadlines.
  • Provides financial incentives: $1,500 for borrower relocation assistance; $1,000 for servicers to cover administrative and processing costs; and up to $1,000 for investors for allowing a total of up to $3,000 in short sale proceeds to be distributed to subordinate lien holders (on a one-for-three matching basis).
  • Requires all servicers participating in HAMP to implement HAFA in accordance with their own written policy, consistent with investor guidelines. The policy may include factors such as the severity of the potential loss, local markets, timing of pending foreclosure actions, and borrower motivation and cooperation.

The program does not take effect until April 5, 2010, but servicers may implement it before then if they meet certain requirements. The program sunsets on December 31, 2012.

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Filed Under: Government, Loan Modification, National Stabilization Program, Short Sales

Are Loan Modifications Working?

January 25, 2010 1 Comment

Are loan modifications working? Local Realtor Kristin LaVanway gives some commentary on whether or not loan modifications are working.

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Loan Modification – Free Help

January 20, 2010 2 Comments

Loan Modification – Free Help

The fact you are here and noticed the word “Free” makes you suspicious as most of us have heard some nightmare stories of how people are charging desperate homeowners, thousands ($1,000′s) of dollars, hoping to stay in their home and thwart off the possibilities of foreclosure.  Unfortunately, some of these modifcation companies do not deliver and keep the distressed homeowner with less money in their distressed pockets.  There is hope and we are excited to offer our readers and their friends and families this information.

The good news!  There is a HUD Sponsored “Not for Profit” Agency that dedicates their time and efforts to assisting homeowners on their loan modification for “FREE”.  

Who, what, where and how?

NID-Housing Counseling Agency (NID-HCA), program is designed to offer the myriad of housing related issues to our clients, nationwide.  The function of the agency is to provide housing related counseling to all persons/entities with housing needs, FREE OF CHARGE. The agency is staffed by a network of fully training counselors/real estate professionals with extensive multi-choice knowledge of the real estate industry, in general and within their areas, specifically. The agency also has an extensive referral system for all of your real estate related needs. Counseling is offered in the following ways to accommodate the client: Office location, telephone, e-mail, confidential fax on demand, and TDD (for the hearing impaired). Spanish and Cantonese counselors are available at each location. Counseling is strictly confidential. One-on-one and/or group counseling seminars are available. Counseling questions submitted by e-mail and fax are confidential and will only be accessible by the counselor.  We offer counseling to consumers, as well as non-profits, public agencies and faith-based organizations in each of the following areas: .

Default/Foreclosure (loss mitigation)
The NID-HCA default/foreclosure-counseling program to date has a 95% success rate in avoiding client lose of property due to foreclosure (without the client filing a bankruptcy). NID-HCA works with your lender to negotiate the best terms available for all parties involved. NID-HCA will discuss extensively with the client issues such as, how to avoid foreclosure, options to foreclosure, communicating with your lender/service, renegotiating your loan terms, managing your debt and re-establishing your credit.

Delinquency/Default Counseling
We provide information and recommendations, allowing our clients to make appropriate decisions to settle their mortgage delinquency/default problems. In this process, we ensure that our clients understand all their options and that lenders/servicersadhere to industry-standard loss mitigation practices. NID-HCA continues to assist its clients until their problems are resolved. We also work to reduce loss mitigation costs to both our housing clients and mortgage lenders.

Predatory Lending Counseling
NID-HCA arms its clients with knowledge that enables them to negotiate fair loan terms and to protect themselves against potential predatory lenders. For clients who feel they have been victimized by predatory lending practices, our counselors help clients investigate the validity of their concerns, and when indicated, report unlawful conduct to the appropriate authorities.

CONTACT:

NID Housing Counseling Agency
668 North 44th Street
Phoenix, AZ 85008

Office: 602-685-1056
Fax: 602-685-1057

[email protected]

By Ted Canto, Sr. Mortgage Consultant

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Will Main Street Get A Bailout?

December 28, 2009 Leave a Comment

One of the common phrases I have heard over the last couple of years is “how come Main Street doesn’t get a bailout?”

And I have usually just shrugged and said that no one had called me to ask my opinion but as soon as I heard of it happening, I would be sure to keep everyone posted.

I just now caught the first whiff that the federal government *may* be taking action to “bail out Main Street”.

Bailing out main street could take any number of different forms, but the most probable form in my opinion would be some kind of mechanism that deals with the problem of Negative Equity – or where people owe far more than their home is worth.

From Bloomberg:

Dec. 28 (Bloomberg) — The U.S. Treasury Department’s expansion of its capital backstops for Fannie Mae and Freddie Mac may foreshadow a shift in the government’s mortgage- modification tactics, Keefe, Bruyette & Woods analysts said.

The Treasury announced Dec. 24 that the two mortgage- finance companies, which were seized by the U.S. almost 16 months ago, could tap an unlimited amount of capital for three years, up from as much as $200 billion each. The companies’ needs would be unlikely to exceed the prior limits “even in a stress case scenario,” Bose George and Jade Rahmani, the New York-based analysts, wrote in a report today.

“Given this outlook, we believe that the main driver of this significant change is the flexibility it gives the government to take more aggressive action to support the housing market, including potentially going down the road of allowing some form of principal writedown,” the analysts wrote.

Ok, so that doesn’t exactly mean that an announcement is imminent – but it is interesting to see what possible things may happen:

Shifting to principal forgiveness to cure so-called negative equity that makes borrowers more likely to abandon loans whose payments they can afford may prove more costly for Washington-based Fannie Mae and Freddie Mac of McLean, Virginia, by sparking “another wave of delinquencies as people look at it as a rational choice” to default to seek the aid, George said in a telephone interview.

While you probably shouldn’t bet on some kind of formal principal reduction program coming out any time soon from Fannie Mae or Freddie Mac, if I have learned one thing in the last two years, it is this:

Anything is possible.

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Stop Foreclosure: Options To Help Prevent Foreclosure on Your Home

November 16, 2009 Leave a Comment

Have you inadvertently lost your job or a major source of income recently? Are you delinquent in your mortgage payments, or will you be presently? Is your Option ARM or Alt A ARM getting ready to modify? Have your mortgage payments recently increased? If so, you may not be aware that your lender may have options to prevent foreclosure which are available to you.

Mortgage options centered around helping you avoid losing your home to foreclosure are called mortgage loan workouts. Mortgage lenders provide mortgage workouts to their customers in several different ways.

Ways To Prevent Home Foreclosure

  • Deferment – Deferment allows you to pay part of your mortgage payment at a later date, per an agreement with your mortgage lender. The reduction sum of your existing payment is tacked on to your principal, which you will have to pay at a later date. If you need some short-term relief due to a brief loss of pay that has been resolved or soon will be, this is a great solution to stop foreclosure.Student loans, which are normally deferred until sometime after the student graduates from college, are similar to this type of workout. A mortgage can work in the same fashion.
  • Repayment Agreement or Forbearance Plan – A forbearance plan may be the solution if you have got behind on your mortgage due to some short term reduction in income that has been resolved. The money you owe from missed mortgage payments can be spread out over a series of monthly payments. You will see a temporary increase in the amount of your mortgage payment, at least until the past due money that you owe is paid back during the forbearance plan. Once the money is paid back that you owe, your mortgage payment will return to its normal level.
  • Partial Claim or Second Lien Mortgage – Based on your financial situation you may be able to put the past due amount that you owe into another mortgage that you may or may not have to pay back. This loan will have to be paid back once you are able to refinance or sell your property.

Solutions If You Want To Move

Several solutions exist that can help you stop a foreclosure on your home if you want to move.

  • This first solutions is called a short sale. When you get your mortgage company to agree to let you sell your home for less than what you owe on it, it is called a short sale. If you plan to sell your home for less than you owe, you will have to get your mortgage company to agree, since they have a lien on your home. If you plan on selling your home, get started early on the short sale process because it will take some time.
  • A Deed In Lieu of Foreclosure is the second option. A Deed In Lieu Of Foreclosure is where you would transfer legal custody, or title, of your house to your mortgage company in exchange for the debt that you owe them. If you do hand them legal ownership of your property you will want to make sure that they totally forgive your debt. If you no longer own or live in the home, the last thing you want is to have to make mortgage payments on it.

Get Started To Prevent Foreclosure

  • Your best way to prevent foreclosure is to get the help of your mortgage company. You will be on the way to quickly solving your problems if you contact them and ask for their assistance. If you make an effort in good faith to arrive at a solution they will be more likely to work with you. Good luck.
  • Close behind speaking to your mortgage company is speaking to a short sale real estate company.
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Tough Choices: What To Do When You Owe Far More Than Your Home Is Worth

August 17, 2009 Leave a Comment

If you bought a house between 2004 and 2006, chances are you have talked with someone about how far under water you are in your house. If you haven’t lost your job or suffered a decrease in personal income, it isn’t really that big of a deal, you just keep making your house payment and think to yourself “it will come back, I just have to wait out the dip in value.”

Will it?

I don’t know, and the truth is no one else knows either.

But for those of you who have had some kind of “hiccup” in your income – meaning you make less money now than you did when you bought the house… you have some tough choices to make. I know, because many of you call me asking me what you should do and my only advice is to “pick” one of the choices that are available to you rather than just “let” one of the choices happen to you.

Tough Choices: What To Do When You Owe Far More Than Your Home Is Worth %spacebasename

But here are your choices (in a nutshell) of what your options are if you are severely under water in your home (you owe more than 125% of the value of the home) and you have had a hiccup in your income:

Tough Choices:

  1. Keep making your payment.
  2. Attempt to get a loan modification by calling your lender.
  3. List your house for a “short sale”.
  4. Negotiate for a deed-in-lieu of Foreclosure with your lender.
  5. Go through the foreclosure process.

Keep Making Your Payment

The simple fact is that if you find some way to keep making your payment, then nothing will change. True, it may be harder to keep making your payment now than it was before your income was reduced – but as long as you keep making your payment, most likely nothing will change. It is possible that you could get a loan modification if you keep making your payment, but not a 100% for sure thing.

Work With Your Lender For A Loan Modification

Most people are aware of what the term “loan modification” means – and the easiest way to get a loan modification (note: they are not easy to get in my opinion) is to simply call your lender and start the process with them. Be prepared for a loan modification to take months. Most of the time, a loan modification will reduce your interest rate and/or extend the term of your loan (usually from 30 to 40 years) but will not reduce the amount of money that you owe.

Short Sell Your Home

List your home for less than you owe your lender and attract a buyer. Once the buyer submits an offer, the lender must approve the offer – because they will most likely be writing off the difference between what you owe and what they will get from the sale of the home.

Deed In Lieu of Foreclosure

Sometimes your lender will allow you to leave the home in good condition and accept a deed-in-lieu of Foreclosure. The Deed in Lieu is better than foreclosure in my opinion only because once you have a deed-in-lieu negotiated out with the bank, you can get on with trying to repair your credit. With a foreclosure, there will still be negative reporting on your credit until the bank has disposed of the property.

Foreclosure

The last resort is foreclosure. The truth is that the best way to prevent foreclosure is to know what your options are and to start at the top of this list and try to get each one done. But in the end, at some point, if you don’t make your payment and you don’t get a loan modification done and you don’t sell your home and if you don’t get a deed-in-lieu of Foreclosure… Foreclosure happens.

And it isn’t the end of the world.

But it is time to start picking up the pieces and start re-building your credit.

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