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Loan Modifications are a very emotionally charged issue. If you are a homeowner in trouble and want information on your chances of getting a much needed loan modification it can be a nightmare to get the right information for your specific situation. You have probable heard about the many scam artists ready to take advantage of desperate homeowners that will do pretty much anything to save their home. This is why it is best to get expert advice from one of the many government appointed (FREE) institutions.

However it is a good idea to get a general idea of your situation in order to at least make the right questions.

Let’s present a hypothetical scenario:
You are the owner of a house worth $300,000 on which you owe $400,000 you also have debt racked up on a second home. Can you get a loan modification?
This scenario is rather common. In the past years many saw wisdom in investing in bricks and mortar and buying to rent. When they struggle to find someone interesting in renting they struggle to pay both mortgages, and that’s if they haven’t lost their job.
Unfortunately, even though the scenario is common it is not a good candidate for a loan modification. The reason for this is that homeowners with two homes are too financially committed to qualify. In order to qualify for a loan modification your mortgage payments must not be over 31% of your income. If your mortgage payments are over 31% you are considered a high risk homeowner that should never have spent such a high percentage of their income on a mortgage.

The best options in this case is to try to keep payments and keep your head above water (easier said than done)  and down size your mortgage payments as soon as possible in order to qualify for a loan modification.

The question is, if you are in that situation, can you carry on your primary home until the economy decides to come back?

That will depend a lot on how high your interest rates are and what type of interest (ARM or Fixed) you have. The good news is that interest rates are low right now so even the riskier ARM loans are not so bad, at least for now. The issues might come in 2011 when many experts are predicting interest rates are going to climb. For those that are already overburdened this could be what brakes the proverbial camel’s back.

The key is to plan for that very real possibility and downscale now you can plan for it. This might mean short selling your second home and putting your mortgage payments below 31% in order to qualify for a loan modification. However if it is a case of losing both homes or keeping one it is a bit of a no-brainer.

Whatever your circumstances your best option is to get help straight from the experts. The good news is that this information is free as the government is providing it as part of their loan modification program.

Related posts:

1. Loan Modifications, Story Of Struggle For Banks And Borrowers Alike
2. Loan Modifications and FHA Refinance What Is The Deal
3. Loan Modifications No Match For Rising US Foreclosures.

Related posts:

1. Loan Modifications, Story Of Struggle For Banks And Borrowers Alike
2. Loan Modifications and FHA Refinance What Is The Deal
3. Loan Modifications No Match For Rising US Foreclosures.

Foreclosures have struck communities across the country in the wake of the subprime meltdown and ensuing housing slowdown.

While the FHA continues to garner headlines as an increasingly attractive lending option for prospective homebuyers, one of the agency’s lesser known programs may hold the key to helping to rebuild neighborhoods nationwide.

Government loans are headed for a record year in 2009. The FHA’s traditional home loan program has grabbed significant market share in the last fiscal year. But its unique program for purchasing and refurbishing rehab properties is gaining momentum.

The FHA 203(k) program provides qualified borrowers with fixed-rate and adjustable-rate mortgage options, which can be used for buildings anywhere from one- to four-family in size. Down payments, like the traditional FHA loan, are as low as 3.5 percent. Generally, the FHA will set the loan amount based on what the agency thinks the home will be worth upon completion of all rehab work – that includes the actual costs of repair.

Buyers can even use the 203(k) program on structures that were torn down, provided there’s some semblance of foundation at the site. A 203(k) loan can be used to cover rehabilitation costs such as room additions, painting, building decks, and a host of other alterations. Other acceptable refurbishing includes:

• Roofs and gutters

• HVAC systems

• Plumbing and electrical

• Flooring: carpet, tile, wood, etc.

• New windows and doors

• Weather stripping & insulation

• Stabilizing or removing lead-based paint

• Basement completion and waterproofing

• Septic or well systems

Buyers can also take advantage of the FHA’s Energy Efficiency Mortgage program and finance into the mortgage the cost of significant efficiency improvements. There are specific values and dollar limits for the agency’s EEM program.

Underwriting standards can at times be stricter for 203(k) loans, although there are no income or credit score restrictions to qualify. In most cases, the rehab work must start within 30 days of closing, be complete within six months and be professional in nature.

The 203k program doesn’t cover things like luxury improvements, which homeowners have to pay for from their own pockets. To learn more about FHA 203k loans, visit the HUD website here.

Related posts:

1. First Jumbo Loans, Now Interest Only Gets Whacked
2. BofA to modify 265,000 Countrywide loans
3. The Homebuyer’s Tax Credit and FHA Loans

Related posts:

1. First Jumbo Loans, Now Interest Only Gets Whacked
2. BofA to modify 265,000 Countrywide loans
3. The Homebuyer’s Tax Credit and FHA Loans

Obama’s Mortgage Refinancing Aid, Who Really Benefits?

Obama’s administration latest efforts to protect and aid family’s that cannot pay their mortgages and are in serious risk to foreclose aims to help 9 million home owners and further measures intend to provide information and advice to home owners on mortgage refinancing and on mortgage options to home buyers.

What are the effects of these measures and who really benefits from them?

Obama’s refinance and modification program could help as we said up to 9 million homeowners to reduce their monthly payments to an affordable level. The program does not stop there, aiming to provide 5 million homeowners with aid through government owned Fannie Mae and Freddie Mac as well as earmarking $75 billion to prevent foreclosures.

What has happened up to now? Up to date it seems (reliable stats are still to be produced due to the lack of a tracking system) around 200,000 borrowers have received the option for trial modifications according to the U.S Department of Housing and Urban Development, HUD.

This is great news for the 200,000 that benefited but still a far cry from a real solution. It is early days to bury the program but the predictions of the Mortgage Bankers Association are not promising. The MBA says that the government’s expectations are unrealistic and that lenders will only make $2.03 trillion from mortgages this year, not even close to the associations forecast for this year which was $750 billion more than the estimated amount.

Why is this the case when the U.S government is investing hand over fist in mortgage backed securities and printing money like it’s going out of fashion to invest in banks. The banks will say that the increase in interest rate is negating the government’s efforts while others blame the fact that banks have little incentive to speed up the financial aid procedures and that there is not enough control from the government. It does seem like banks are getting a pretty good deal being provided with cash to invest in government backed mortgages, a win-win situation for the lender.

On the other hand the borrowers that need the aid to continue living in their home are facing long procedures that stretch for months and months with no guarantee of a clear answer after the ordeal.

Another glitch in the mortgage refinance aid is that it seems to ignore those that are worse off with upside down mortgages. Although the latest aid packages have included mortgages that are up to 125% of the current value of the house this only applies to Fannie and Freddie backed mortgages that do not have a very large presence in the worst hit areas like California and Las Vegas to mention two.

Related posts:

1. Mortgage Refinancing For Underwater Borrowers Now Available
2. Fannie Mae execs get bonuses as refinancing volume triples
3. Has The Mortgage Refinancing Season Ended

Related posts:

1. Mortgage Refinancing For Underwater Borrowers Now Available
2. Fannie Mae execs get bonuses as refinancing volume triples
3. Has The Mortgage Refinancing Season Ended