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Loan Modifications sponsored by Obama’s administration HAMP (Home Affordable Modification Program) program does not a have a very long history but Wachovia has lagged at the bottom of it from the very beginning.

Wachovia has over 82,000 borrowers with home loans, the economy is doing pretty bad which has caused a large percentage of those borrowers struggle to make their payments. However Wachovia has only provided loan modifications for 3% of their struggling borrowers, those 60 days or more behind their payments and that includes borrowers that are still fighting through a loan modification trial. To give you an idea of how many borrowers get through the trial loan modification to date over 750,000 loan modification trials have been filed but under 40,000 have qualified for permanent loan modifications.

Wachovia is not the only large lender and servicer that has poor a poor loan modification conversion but it 3% is bad even at the bottom of the loan modification conversion league.

The reasons for low conversion numbers are complex. Pointing fingers at servicers and banks is easy and the fact that some banks are doing much better than 3% shows that Wachovia and other servicers can do more, however there are many other factors. Loan Modifications do involve paperwork and depend on Net Present Value tests. Borrowers are not always as good at filling and filing paperwork as they would like and the sad truth is that many people don’t qualify for loan modifications under the current rules. For instance banks are only required to approve a loan modification if the Net Present Value test shows that it would be profitable for the bank to grant the loan modification instead of simply continuing with the foreclosure.

Are Wachovia Loan Modifications damaging your credit score?

Another issue with loan modifications is how they affect your credit rating. As most of the borrowers that qualify for loan modifications can a) afford a modified loan payment, b) have a mortgage that is not terribly “underwater” and c) the will and stamina to endure the painful ordeal of a loan modification it is likely they care about their credit rating after having their loan modification approved.

Various horror stories from the “lucky” 3% of Wachovia’s borrowers that qualified for a loan modification have mentioned how Wachovia guaranteed there would be no negative information reported to their credit file to later realize Wachovia had reported them as undergoing Paying Partial Payment Agreement which is actually way worse than being reported for a loan modification program under the current HAMP program.

It is possible that these cases are isolated to “private” agreements between the borrower and Wachovia without falling under the HAMP program, which does not approve of this kind of reporting. This does not change the fact that it is a straight lie and measures should be taken to stop this if it has become a matter of course with Wachovia. Borrowers can easily destroy their credit by becoming delinquent on their loan quite easily on their own without any servicers “help” in the form of a paying partial payment agreement.

It seems that one of the reasons for these complaints is that when Wachovia was bought out by Wells Fargo loan modification terms were changed and that included credit rating report procedures.

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Most troubled homeowners view President Obama's foreclosure rescue plan as a way out of their financial troubles.

Loan Modifications and Mortgage Modifications are being sold like they are going out of fashion and both the Government and private banks are reporting successes in the number of loan modifications and mortgage modifications processed.

If you are desperate to keep your home and you are finding it difficult to pay for your mortgage payments a loan modification might be the option for you. However there is a question you must ask yourself. Is a loan modification or mortgage modification worth my trouble? There are a number of negative consequences that are attached to mortgage modifications.

Among them is the risk of paying more that the mortgage is already costing you in deferred and balloon payments.

Another issue related to mortgage modifications is the possibility your credit score could be affected. It might surprise you but taking a government sponsored loan modification could lower your credit score. The reason for this is that some banks and loan providers report loan modifications as partial payment plans. These plans include programs that reduce the debt of borrowers that can’t afford to pay their loan. FICO, one of the organizations that prepare credit scores from the information financial institutions quantify partial payment plans negatively.

This could make it harder for borrowers that take on a loan modification to buy a home in the future. Of course if you are happy where you live and you just want to save your home this should not be a problem.

First-time Homebuyers Tax Credit

A completely different type of credit that people are concerned about is how the mortgage crisis will affect previous government sponsored first time homebuyers tax credit programs.

These tax credit provide a tax break, a percentage discount or sometimes a dollar to dollar deduction from tax of any mortgage related expenses.

The government is as interested in promoting home purchases as it is to stop foreclosures so these programs have been extended. However the recession is affecting the U.S budget so it is wise to get on the first time homebuyers tax credit bandwagon while there is a wagon to ride. The deadline for applying for a tax credit has been extended so that purchase agreements must be signed before May 1^st and closed by July 1^st.

For more information on this matter visit www.federalhousingtaxcredit.com

The same applies for other tax credit programs like the HOPE scholarship tax credit, a sister program to the HOPE loan modification program. This tax credit program provides dollar for dollar tax breaks on college tuition, fees and course materials. This program will end next year so it pays to apply early. For more information visit www.finaid.org.

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On the face of it, a reverse mortgage sounds like a no-lose deal for older homeowners. A lender gives you what amounts to a cash advance on your home equity -- no minimum income or credit score required. And you don't have to pay it back until you move or die, when the proceeds from the house sale typically will be used to close out the loan. But in fact, reverse mortgages have some serious drawbacks. Here's what you need to know.

Loan Modifications are a matter of general interest to many of us, especially the 9 million plus in United States that are struggling with foreclosure and could lose their home. Unfortunately many don’t understand loan modifications and what is worse can’t identify crooks that are out to trick borrowers and pour more misery onto already desperate households.

Information is as always power, in loan modifications not knowing what you’re doing could spell disaster, cost you thousands of dollars and still lose your home.

This article sheds some light on some of the biggest examples of lies, scams and misinformation in the loan modification industry.

1)    You have to be behind your payments to qualify for a loan modification or aid.
This is simply not true. If you can avoid getting behind in your payments without falling into poverty it is best to keep up with payments. The moment you become a delinquent borrower your credit score receives a strong blow. The government helps borrowers that are struggling with their mortgage payments before they become delinquent as long as they qualify and are willing to follow the directions of the mortgage aid plan. It has been the case of banks in the past to only allow loan modifications for borrowers that are delinquent but this is not the case with the current loan modification programs.

2)    All mortgages can be loan modified.
It would be nice but unfortunately this is not true either. The government is only offering financial aid to help home owners to modify their first trust deeds (not the second, third…. Mortgages) You can get these mortgages modified, there is no law against it. However banks have no incentive to do so, and it is hard enough to get them to modify the loans they get paid for their trouble.

3)    I can’t do it by myself; I must get someone else, a professional, to do it for me.
It is amazing how many experts have appeared from nowhere in the area of loan modification when only a couple of years ago it was a practically unknown sector of banking. The fact is thought, that whatever loan modification “experts” tell you nobody can guarantee you results. Only the mortgagee, the person lending the money (this is not always the banks) can approve a loan modification. The process is slow and frustrating but you don’t need an expert to do it, you can do it yourself.
It is true that “experts” can provide help on how to fill in forms and make the right decisions. However there are “free” organizations that provide that kind of help for nothing.

4)    The “value” of my house has dropped so they must reduce my principal.
It is very hard to get your principal, or the amount you owe to the bank, reduced. Banks will often reduce your interest rate, monthly payments or even increase the length of your loan but getting a reduction on your principal is rare to say the least.

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Purchasing new CDs could hurt your credit score if banks perform multiple "hard pulls."

Mortgage interest rates drop but illegal mortgage fees could negate savings

The steep drop in interest rates has caused a shopping frenzy in many western countries with buyers looking for a good deal. The rise in applications has not been in proportion to the number of sales but the figures are still encouraging.

If your credit score is in good shape and you have some savings for a down payment and some more for three to six months mortgage payments you could do very well with either a refinance of your current mortgage or with a new mortgage. Even the high end jumbo mortgages have opened up as the interest rates for large mortgages starts to drop also.

However illegal mortgage fees could nullify the savings you make on your mortgage refinance, loan modification or new mortgage.

How can you identify illegal mortgage fees and what can you do about it?
Illegal mortgages how to find them and avoid them.

It would be hard to list all the possible ways of charging illegal fees from borrowers. Three principles might be more useful: Lenders deserve to be paid for their work and services. They should not charge for services they did not perform and they should not receive illegal kickbacks.
For lowly borrowers like us finding out about illegal kickbacks is pretty much impossible unless we invest counterproductive amounts of money investigating lenders what is more feasible is to check for lenders that mark up on service other companies or individuals provide. For instance if your bank requires a valuation of your property by a qualified surveyor and the company charges the bank $300 the bank is not allowed to charge a handling fee or markup in any other way fees for work they have not carried out.

As I mentioned above it is difficult to provide a comprehensive list of fees you must beware of but this will give you an idea. Banks cannot put mark-ups or get kickbacks for that matter on:
-    Appraisals
-    Settlement fees. That is settlement fees charged by other banks or institutions. Banks will charge settlement fees when you pay loan early as well as other circumstances unless you have negotiated some other arrangement.
-    Credit reports.
-    Flood certifications.
-    Pest inspections.
-    Title insurance and title searches.

This is important to understand because most of us would expect that banks are allowed to charge a handling fee for services they arrange but they aren’t, although that hasn’t stopped many lenders to try and get away with it.
There is an opportunity to find a good mortgage deal or to refinance your mortgage, do your homework find the right mortgage for you, but whatever you do make sure you don’t lose all your savings on illegal mortgage fees.

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A cosigner with a good credit score can get a buyer a better interest rate on an auto loan.

Loads of equity and a good credit score should make a home mortgage refinance a slam dunk.

Refinancing is often considered one of the most beneficial ways to save money on your home mortgage.  Refinancing is when you renegotiate the terms of a loan, essentially the refunding or restructuring of debt with new debt, equity, or a combination of both.  Refinancing is basically taking a new mortgage to replace an old one.  Refinancing is often the best way to save money, get a lower interest rate and a lower monthly payment, or keep the monthly payment the same and have a shorter loan term.  Refinancing is used in most cases to improve overall cash flow.

There are many things that play a role in whether or not refinancing is a good move.  Calculating the up-front, ongoing, and potentially variable costs of refinancing is an important part of the decision on whether or not to refinance.  Sometimes, refinancing is an appropriate way to resolve financial problems.  Refinancing is not advisable if you plan to move in next few years, because the price that you pay for the refinance will just reduce or negate the savings that you get from the interest rate or lower monthly payment.  Another obstacle to refinancing is the current slump in the housing market where values of many homes have decreased to below their purchase price.  If cash flow is an issue and refinancing isn’t available, try to work out a plan with your lender to modify your current loan that would allow you to make either a smaller payment, or to miss a payment until you have the funds.

In the context of personal finance, refinancing a mortgage can be used to pay off high-interest debt such as credit card debt.  Debts can be paid and revolving accounts satisfied so that the homeowners credit is not ruined.  If the borrowers have wisely used their time and opportunities to establish a positive credit history, this should be a benefit to them.  You may be able to secure a lower interest rate because of changes in the market conditions or because your credit score has improved.  If your credit points have been decreasing in recent years, lenders may not endorse the refinance.

Refinancing may be undertaken to reduce interest rates, to extend the repayment time, to pay off other debt, to reduce or alter risk (such as by refinancing from a variable-rate to a fixed-rate loan), or to raise cash for investment.  As part of the mortgage refinancing process, various information that was required for your first mortgage will again be needed (such as your financial records and credit reports for you new loan report.)  You should know how much you will pay in all (interest and principle together) as well the term over which you will be making payments.  Interest rates and number of credit points determine the total cost for a second mortgage refinancing.  Most refinancing lenders offer a variety of combinations of points and interest rates.  Paying more points typically allows one to get a lower interest rate than one would be capable of getting if one paid fewer or no points.  A general role of thumb is that refinancing becomes worthwhile if the current interest rate on your mortgage is at least 2 percentage points higher than the prevailing market rate.  The average cost of refinancing is usually in the range of three- to six percent of the value of the loan, plus any prepayment penalties and charges associated with paying off any second mortgages that may exist.

Though banks have been directed to tighten their credit purse strings by stiffening their loan qualification criteria somewhat, as long as homeowners have done their part by paying their mortgages on time, it’s likely that they’ll have very little trouble finding a lender to accommodate their wishes.  If you decide that refinancing is not worth the costs, ask your lender whether you may be able to obtain all or some of the new terms you want by agreeing to a modification of your existing loan instead of a refinancing.  Whether refinancing is right for you depends upon your own personal situation with regard to your financial objectives and goals.