by phillenbrand on July 10, 2009
A warm welcome to BlownMortgage.com!
We are among the most trusted free home loan modification, debt relief and independent mortgage industry commentary sources online. We have fiercely and successfully been helping fellow homeowners facing economic hardship or foreclosure since 2006.
We are honoured to have been named to be among the Top 3 influential Mortgage Blogs in the industry (by Inman News).
Our US editorial team consists of high profile writers and industry insiders such as Morgan Brown, Jay Hammond, Constantine Von Hoffman and many others. Our frequent stream of unique articles often blows the lid of various Mortgage related topics and our articles are often featured on various authority sources. At the bottom of this page you will always find our 9 latest published articles.
We invite you to take advantage of years of our collective efforts and we look forward to keeping you updated ahead so that you may achieve a lower level of stress and a higher level of financial freedom.
What is a Home Loan Modification?
Mortgage modification is where your current mortgage lender agrees to change the terms of your current home loan so that you may afford to service the monthly payments and avoid foreclosure. Generally the mortage provider will lower the interest rate and change the length of your repayment.
One of the most frequent questions we encounter is from people wanting to know how they can modify their mortgage with a loan modification from their current home loan provider. These folks are usually in adjustable rate mortgages that have exploded, leading to monstrous mortgage payments that have gone delinquent. The process of loan modification is not easy but worthwhile! It takes some gumption, resolve and a bit of salesmanship to get the job done. But if you get your loan mod done you’ll usually receive a new fixed loan at a competitive rate.
Our Free Home Loan Modification Tools
A Word of Caution when Modifying Your Mortgage
Be very careful if you choose to use a loan modification company that takes a fee up front to negotiate your loan modification for you. They cannot guarantee a successful modification and can end up costing you another month’s mortgage payment in exchange for false hope. The best of these companies have done the modification countless times and will actually try to help you in earnest without guarantee. The worst are scams that take your money with a cursory attempt to help you (if any).
Do It Yourself Loan Modification – A DYI Guide
We are big fans of Do it Your Self Home Loan Modifications. Read our full article on loan modifications on your own
Read our latest published articles below
by Andrew on April 29, 2010
Purchasing a loan is very likely to be one of the most serious financial decisions you make. This is especially so if you are looking to consolidate a number of debts, or refinance a subprime (i.e. expensive) mortgage. Signing a loan, or refinancing an existing one, is often a complicated process; the jargon used is difficult to understand and the indexes and complicated terms used to define a loan can be very confusing. This is why too many borrowers go for the first loan they are offered, the one their neighbor or friend recommends, or the one that looks cheapest but isn’t.
You can avoid this by taking some simple but important steps when looking for a loan. Look at the task as a job, a very well paying job, because the difference between a bad loan and a prime loan can mean thousands and thousands of dollars in your pocket. Think of yourself as an investor and commit yourself to choosing the best possible loan. Deciding which loan is the best for you is not as easy as it should be. There are hidden costs, varying rates of interest, prepayment penalties, and other factors that make deciding which loan is best more complicated than simply comparing the cost of the monthly payments.
- Get a clean sheet of paper and write down the names for at least three loans you want to choose from in three wide columns. The more loans you have to choose from the better, but it can get a little daunting when you have too many.
- Write down the contact names, numbers and address of each lender.
- Write the length of the loan terms. Obviously the shorter the term the less interest you will pay.
- What type of interest rate does it have? Fixed, variable, ARM?
- What is the initial interest rate?
- When will the interest rate change? Many loans offer a low initial interest rate as a sweetener that change after three or six months.
- How often can the interest change?
- What is the maximum rate you will have to pay? Some variable loans come with a rate ceiling or maximum that provides borrowers with a worst case scenario they can plan for.
- What is your initial monthly payment after all expenses have been included?
- Is there a balloon payment? Many lenders keep monthly payments low to attract customers but leave a huge sum to be paid at the end of the loan term.
- If there is a balloon payment, how big is it and when does it need to be paid?
- Work out what is the most you can expect to pay on your loans in six months, twelve months, and twenty-four months.
- Do the loans have prepayment penalties if you want to pay the loan faster and save money on interest?
- What is the penalty?
- What is the lender’s fee on the loan?
Weigh up the answers to all these questions (and any more you can think of) and decide which is the best loan for you. Before deciding on your loan, loan modification, or debt consolidation loan talk with a qualified (and free) HUD counselor (find one near you at www.hug.gov) . They can provide you with practical advice on how to make a good decision on your mortgage.
by Andrew on April 24, 2010
Avoiding foreclosure is a serious concern for millions of American homeowners. There is a lot of advice on methods to avoid losing your home when you are in financial difficulties. The Obama administration has an arsenal of loan modification programs, alternative foreclosure programs, forbearance periods for the unemployed programs and the list goes on and on. However, as it has been widely advertized, these programs have not obtained the results hoped. So what are the best options for a troubled borrower?
1) Do not ignore the problem. A big issue with many homeowners is that they ignore their financial problems until it is too late. This ostrich syndrome of hiding our heads when we are in trouble is natural, but financially very dangerous. It is important to act straight away as soon as you realize you are going to be behind in your mortgage payments. The sooner you act the more options you have.
2) Know your rights. Before you contact your creditors (and you should do that as soon as possible) look into your rights as a borrower. Read your loan documents carefully and refresh your memory on what your lender can do if you do not make payments. Review your state laws on foreclosure. Every state has different foreclosure laws and timeframes.
3) Contact your lender as soon as possible. Did we already say that? I’ll say it again, contact your lenders. They are interested in finding a solution and providing you with a workout so you can continue paying your loan. There are many options to consider: forbearance periods, reinstatements, loan modifications, deed-in-lieu, refinancing… It all depends on your personal circumstances.
4) Contact a legitimate housing counselor. Non-profit organizations sponsored by the government are ready to give you personalized advice. Call (800) 569-4287 and find one near you.
5) Avoid foreclosure prevention companies. Some of them can help, but the bottom line is that you do not need to pay for these services. Unless you believe loan modification programs are part of a government conspiracy to take your home from you, why pay for a service the government provides for free. On the other hand, unscrupulous loan modification agencies and lenders can cause further damage to your financial situation.
by Andrew on April 18, 2010
Exceptional times call for exceptional measures. That was the reasoning behind the bailout of the big banks and insurance companies. We had to swallow the bitter pill of using taxpayers money to bail out corporate America. It was after all in the interest of the American economy. However, this reasoning does not seem to apply to loan modifications.
Obama’s loan modification revamp includes cutting the principal balance of millions of mortgages in the United States. These cuts are aimed at chipping away at the negative equity of underwater mortgages. These mortgages are worth more than the market value of the houses they are paying for, and are the main force behind the rising number of foreclosures.
Obama’s administration is talking to the leaders of the top banks and servicers and telling them they need to cut back on the principal balance of underwater mortgages. Although banks like BoA, Citigroup, Well Fargo, and J.P Morgan Chase accept the need of reducing the principal balance in some situations they will not accept it as a generic measure for all underwater mortgages.
This is not a surprise because the measures suggested by the government would be very expensive. Currently there are over 11 million underwater mortgages. Cutting back the balance of these mortgages to their current value would cost the American taxpayer $700 billion to $900 billion according to the CEO of Morgan Chase Home Lending, not to mention what it would cost banks. Let us not forget that Fannie and Freddie, the government chartered and sponsored leader of the secondary mortgage market, would also have to absorb a chunk of the losses that could amount to up to $150 billion.
Not surprisingly banks do not think this would be responsible or even beneficial for homeowners. In fact Morgan’s CEO is also quoted as saying: “such programs could be potentially very harmful to consumers, investors and future market conditions”. It is nice to have the banking community taking an interest in the consumer’s interest. I guess the $700 billion bank bailout was in the consumer’s interest, so it was money well spent.
This is not to say that big banks are not willing to provide principal balance cuts on principal. Bank of America has famously promised to offer balance cuts to 45,000 homeowners that are in serious financial difficulties, with subprime loans and seriously underwater. Banks are apparently scared of creating a default avalanche if consumers get wind of the possibility of reducing their mortgage balances by thousands of dollars if they default on their mortgage payments.
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