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Loan Modifications have been put forward as the great savior of the current credit crisis. Whether this is true or not is a matter of debate. I personally feel that dealing with a credit crisis by trying to fix mortgage issues is not going to deal with the big picture.

Nevertheless it is a fact that many are benefiting from the taxpayer subsidized loan modifications that are being grudgingly supplied by banks and other mortgage providers.

However many are not benefiting at all from this service, what is worse many have considerably worse off because they tried to get a loan modification and bumped into a scam artist or organization that duped him out of the little money he had left. Nobody wants to become a statistic, especially when it is the number of borrowers that are conned out of their homes by dishonest “loan modification consultants”.

What can you do? Here are 6 easy steps:

1)    Know the beast. Understanding what your options are and who qualifies for aid is vital. Reading www.blownmortgage.com and other mortgage help articles will provide you with inside information about loan modifications and mortgages. Other websites that should be on your list are: WWW.hud.gov www.makinghomeaffordable.gov and www.financialstability.gov . In fact wherever you go for help make sure it is free. The best help out there on loan modifications is, believe it or not, is free.

2)   Beware and be alert. If you are struggling with your mortgage you are a prime target for scams, recognize and avoid common scams.

3)  Avoid fast loan modifications. Companies who want you to sign papers immediately or who claim they can save your home if you sign of the deeds of your house to them are scam artist. Nobody can save your home except you and your mortgage provider. Organizations and individuals can provide valuable information but they can’t guarantee anything because they don’t make the decisions.

4)  Again, DO NOT sign the deed of your house to anybody unless you are working directly with the mortgage company to forgive your debt. In other words only sign off the deed of your house if you are selling it back to the bank.

5)    Only make mortgage payments to your bank. A common scam is for a “consultant” or loan modification company to ask you to pay them so they can deal directly with your mortgagee and make the payments for you. As you probably guessed this payments stay in the pockets of the scam artists while you get deeper in debt.

6)  Don’t pay anybody for advice on your loan modification or for counseling services on a delinquent loan. This is not to say they are all scam artists but even the kosher variety or not as good as the organizations that provide free counseling as a public service.

Related posts:

1. Loan Modifications, lies, scams and misinformation
2. Creative Ways a Loan Modification Lowers Your Monthly Payments
3. Loan Modifications and FHA Refinance What Is The Deal

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1. Loan Modifications, lies, scams and misinformation
2. Creative Ways a Loan Modification Lowers Your Monthly Payments
3. Loan Modifications and FHA Refinance What Is The Deal

A controversial $3.9 billion federal program aimed at saving neighborhoods blighted by foreclosure is hitting hurdles that could threaten its effectiveness.

There was another tick-up in home prices in July, a further indication that housing markets may be stabilizing, according to a report issued Tuesday.

Providing loan modifications to those that need them and are eligible according to the current criteria is the goal of the cash happy loan modification aid program.

The goal is to keep out scammers and those who wish to take advantage of the system while not letting the “deserving” fall through the cracks. This is an ambitious goal. As we have discussed in previous blogs making good rules that keep out the cheats and welcomes the eligible is very hard.

Here is the current ten point criteria for loan modifications:

1.)    Loans must be conforming conventional loans or conforming jumbo mortgage loans and they must have been contracted before January 1, 2008. What is a “conforming” loan is changing all the time.

2.)    You must be three payments past due. This requirement was happily dropped. You don’t need to be behind in your payments although you must be able to prove you can’t pay your mortgage payments but could afford those of a modified loan.

3.)    The loan is secured by a one-unit property and must be the borrower’s primary residence.

4.)    The current mark to market LTV must be of 80 per cent or more.

5.)    Property must not be abandoned, vacant, condemned or in serious disrepair as well as being the borrowers primary residence.

6.)    The goal of the loan modification is to reduce monthly payments to 33% of the homeowners monthly income. In order for this to occur, servicers may:

7.)    Capitalize accrued interest, escrow advances and costs as far as state law allows.

8.)    Extend the term of the mortgage (tenure) by up to 480 months (40 years).

9.)    Reduce the mortgage loan interest rate in increments of .125% to a fixed rate of no less than 3%. If this causes the rate to be below market rate it will step up in annual increments  to a market rate after 5 years have passed.

10.)    As a last resort eligible borrowers will be provided principal forbearance which will result in balloon payment. This means payments will be kept low while the big money is paid when the house is sold or the loan matures.

Some of the points of this criterion are under their third or even fourth revision so checking for accuracy is wise. The key criteria is to be able to afford the reduced monthly payments. If you can’t afford a reasonable loan modification there is little hope. This does not mean unemployed borrowers are automatically barred from loan modifications but they must provide some proof of income or prove they are likely to find employment soon.

The methods the government suggests to reduce monthly payments are rather bold which explains why many banks are doing their best to drag their feet as in many cases it actually costs them money to provide the loan modification.

Related posts:

1. Loan Modifications Only Hope For American Dream
2. Loan Modifications, The Truth Behind The Spin
3. Loan Modifications, lies, scams and misinformation

Related posts:

1. Loan Modifications Only Hope For American Dream
2. Loan Modifications, The Truth Behind The Spin
3. Loan Modifications, lies, scams and misinformation

The Obama administration loan modification is out to help those that can help themselves not lost causes that is the claim anyway. The idea is not to bail out greedy homebuyers that took more than they could chew.

That is all very good in theory but how do you regulate that in practice? Not easily. Especially when those that “deserve” the loan modification could fall through the cracks if the requirements for loan modifications are not designed properly.

Understanding the rules can and does help people abuse the system and get breaks they don’t “deserve”. Of course if anybody deserves a loan modification sponsored by the tax payers is a point of dissent I’m not certain of.

However it might be the only way to know how to get the most of your loan modification is to understand the system. And the only way to learn anything is to ask questions. These are a few you might consider asking.

Are banks and mortgage providers required to perform an escrow analysis when completing a loan modification?

That would be an affirmative. Mortgage providers must perform a retroactive escrow analysis before completing a loan modification to ensure delinquent payments capitalized reflect the real escrow requirements required for those months capitalized. Put simply it is worth telling the truth from the word go. Or you are just wasting everybody’s time.

Some mortgages provide a premium refund when at mortgage payoff. Is the mortgagor eligible for the upfront premium refund at payoff of a modified loan?

This is a tricky one, it depends when the closing date occurred.
If your closing date occurred:
-    After July 1, 1991 but before January 1, 2001. The existing 7 year unearned premium refund schedule shown in Mortgagee letter 1994 remains in effect.
-    On or after January 1, 2001 that are refinanced, a 5 year refund schedule as shown in Mortagee Letter 2000-46 applies.
-    On or after December 8, 2004 refunds are eliminated except whne the mortgagor refinances to another FHA insured mortgage, but to a modified 3 year repayment period.

Lets imagine you lose your job. Not a very happy thought, but hey it happens. Can a mortgagee qualify an asset for the loan modification option when the mortgagor (that being you) is unemployed but your wife is employed although she is not on the mortgage?

It depends on the mortgage provider which admittedly is not very comforting. The mortgagee (that is the bank or lender) should conduct a financial review of the household income and determine if there is enough to pay for a modified loan payment but not enough to pay back what is owed.

If this is established the bank must consult it’s legal counsel to determine if the loan modification is possible as the spouse is not included in the original mortgage.

Related posts:

1. Loan Modification Questions: Escrow advances, Partial Claims and Interest Rates.
2. Loan Modifications Questions: Fees, Inspections, Late Charges And Other Concerns
3. Loan Refinance Simple Answers to Important Questions

Related posts:

1. Loan Modification Questions: Escrow advances, Partial Claims and Interest Rates.
2. Loan Modifications Questions: Fees, Inspections, Late Charges And Other Concerns
3. Loan Refinance Simple Answers to Important Questions

The housing industry has been universal in its opposition to the Home Valuation Code of Conduct, and on Tuesday leaders met with New York Attorney General Andrew Cuomo to discuss modifying the rules.

Sales of newly constructed homes rose for the fifth straight month in August, a government report said Wednesday.

Your big remodeling plans may be on hold for a while, but that doesn't mean you have to miss out on this buyer's market for home improvements. Just go small.

Question: I bought a home and qualified for the $8,000 first-time homebuyer tax credit. I'm still a bit confused, though, about the payback rules. Can you explain them? --Jessica G., Houston, Texas

Existing home sales fell in August, snapping a four-month streak of increases, according to a report released Thursday.