Blown Mortgage » Loan modification

Details on the Home Buyer Tax Credit Extension

Blaughridge — Thu, 19 Nov 2009 22:39:00 +0000

Home sales got a needed boost because of the Obama administration’s $8,000 tax credit for first-time buyers. With the national economy and housing market still fragile, the government recently decided to extend the tax credit through June 2010.

The government also rolled out a new tax credit aimed at existing homeowners. Currently in effect, the $6,500 “move-up” tax credit would apply for eligible homeowners who purchase a new permanent residence in the coming months.

Housing experts hope the two tax credits can help the struggling housing market rebound in 2010.

“The new version of the tax credit has the potential to stimulate the housing market even more than the old version due to the fact that more people will qualify under the new rules,” Gibran Nicholas, chairman of the CMPS Institute, an organization that certifies mortgage bankers and brokers, told CNN after the bill’s passage.

Thousands of Americans have already taken advantage of the first-timers program, which defines “first-time” buyers as those who haven’t purchased a home in three years. There are also income restrictions — individuals who make more than $75,000 and married couples who clear $150,000 are not eligible for the first-timers program.

Meanwhile, existing home buyers who have considered upgrading or downsizing can take advantage of the new $6,500 tax credit. Purchasers need to have owned their current home for a stretch of at least five consecutive years in the last eight.

Individual buyers can’t have an adjusted household income exceeding $125,000; for joint filers, the threshold is $225,000. There are also a few other key components of the new $6,500 tax credit:

Home price cannot exceed $800,000.
The home must be the buyer’s primary residence, not an investment property or a second home.
Buyers can purchase several home types, including single-family, condominiums, manufactured homes and even house boats.
Those who purchase before Jan. 1 can claim the credit on their 2009 tax return or file an amended return for 2008.
Military members deployed outside the U.S. have until July 1, 2011, to close on a property. Deployments must have been for at least 90 days between Dec. 31, 2008 and May 1, 2010.

To learn more about the $8,000 first-time home buyers tax credit extension and the new $6,500 tax credit for existing homeowners visit our blog.

Learn more about mortgage loans at Mortgage Loan Place. We specialize in educating consumers on all types of loans with an emphasis on FHA home loans and FHA refinancing.

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Is Strategic Foreclosing The Best Loan Modification For You

Andrew — Thu, 19 Nov 2009 22:08:39 +0000

Last week I received a very interesting comment on one of my articles on loan modifications. The comment claimed that for most underwater borrowers (homeowners that owe more on their property than it is worth) a “strategic default” is smartest way to go.

I had some months ago written an article claiming along similar lines that in many cases foreclosure is the only logical conclusion when homeowners had overspent on their homes and could no longer afford the overpriced luxury homes they had unwisely bought at the crest of the housing boom.

Readers response ranged from claims that greedy buyers had it coming and deserved to lose homes they should never had bought to angry comments from people that felt my cold perspective was detached from the real plight of homeowners.

Opinions on the issue of loan modifications typically polarize to these two opposite views. 1) That loan modifications are an unwelcome intervention to the “natural” forces of free market and 2) that “saving” troubled homeowners is the responsibility of Government and the god given right of homeowners.

The comment I mentioned above intertwined these two views in an arguably “immoral” but very pragmatic perspective that you will hate or love.

The proposition is that if done smartly a foreclosure can provide a clean slate for troubled homeowners that can’t realistically save their homes. Banks won’t like this option but homeowners need to care for themselves, banks certainly do so. These are the steps our anonymous commentator suggests, with some gentle editing:

1) Let the lender foreclose. During this time you will of course not have to pay your mortgage payments.

2) Just before your property is to be sold declare bankruptcy. This will wipe out all liability for the mortgage debt, if this is an issue in your state, eliminate all other unsecured debt and in the process buy you a few more months to move and during which you can save your mortgage payments towards your move.

3) Start rebuilding your life. The market is a mess now anyway and most likely will continue like this for several years. Your credit will be destroyed by the bankruptcy and will appear on credit reports for 7 to 10 years but during this time you can rent while your credit scores improve. In two to three years you could have a decent credit score if you don’t get into more trouble. After only 2 years of a bankruptcy you can qualify for loans that allow for persons who have had a foreclosure/bankruptcy, like FHA for example.

Editors note: Bankruptcy laws have tightened up a bit so this “advice” might be underestimating how many years you will be unable to take a loan and the annoying detail that the government will be pretty much running your financial life for you for years after declaring bankruptcy.

This option is not a great one for loan modification agents, as they don’t get any money out of it but might be a good option for some troubled homeowners.

I must say that I don’t feel this option is a responsible or moral way of dealing with debt but it is another option. Unfortunately the credit culture we live in moves people to spend money they don’t have on things they don’t need. The idea that all that waste can be made to disappear with a convenient bankruptcy does not seem fair. However there are many homeowners that have fallen into dire straits without being irresponsible because of unemployment and the drop in house prices.

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Loan Modifications: 3 Reasons They Are So Slow

Andrew — Wed, 18 Nov 2009 00:51:40 +0000

The Mortgage Crisis or Credit Crisis as many are more accurately describing it has left millions of Americans (and Earthlings worldwide for that matter) in or at the brink of foreclosure. Banks and Government have launched an ongoing set of increasingly aggressive programs to solve this terrible problem.

Not all the help is coming from the Government either. One association of banks which call themselves the Hope Now Alliance assures they have helped keep over 2 million troubled borrowers in their homes by changing the terms of their loans.

Similarly the Government is proud to say they have surpassed their short term goal of 500,000 trial loan modifications nearly a month before schedule. If you hear the sales spiel for these loan modifications it sounds like mortgage paradise; reduced interest rates to zero, whole chunks of the principal balance wiped out and it goes on and on. To be fair some borrowers have enjoyed these excellent deals . What is also true is that many loan modifications simply moved payments to the end of the loan which provided a kick the can down the road solution. Regulators report that half of these loan modifications are defaulting six months later.

The trouble with loan modifications is that it is not easy to qualify to them. The paperwork is enough to drive you crazy and the red tape is so slow you want to scream, especially when foreclosure proceedings continue despite your loan modification is being in process.

Why are loan modifications so slow?

Well there are many answers to this question. We are going to look at three basic answers to this question.

1) Mortgages are not always owned by the bank or institution you bought them from. Banks often simply work as middle men, servicing mortgages for investors. They sell the product, collect payments and answer any questions. IndyMac for instance manages 650,000 loans but only owns 7% of them. The other 93% is owned by a variety of investors ranging from private individuals to pension funds.

This means that when banks don’t own a loan they must ask the investors that own them if they are willing to modify the loan. It is easy to imagine how much paperwork and time dealing with the borrower, getting their details, studying each specific case, then finding the real owner of the loan and asking them if they mind losing some money on their loan is going to take.

2) Banks aren’t designed to modify loans but to sell them. Banks make money by selling loans and mortgages. Modifying them is, as we mentioned above, a slow and time consuming process that doesn’t make money. The government has started to fund the loan modification process which has helped to speed things up, but banks still have to redesign themselves to deal appropriately with the millions of borrowers in trouble.

3) Foreclosures are often a better deal for the lenders. Loan modifications are a hard bullet to bite for lenders. You are asking them to accept a certain loss if they modify the loan by reducing interest rates or “forgiving” a chunk of the balance when they can also take their chances with a foreclosure which might actually make them a profit. In some cases loan modifications are profitable for both the lender and the borrower and in those cases paperwork does seem to go faster.

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Loan Modifications: The Loan Workout Formula To Accelerate Your Modification

Andrew — Mon, 16 Nov 2009 00:47:44 +0000

The News is littered with horror stories of homeowners that have been taken for a red tape ride, paperwork is lost, or applications are dropped because a vital piece of paperwork that was never actually requested is missing, all while homes are ultimately and tragically lost.

What can be done to accelerate this process and avoid being a main character in one of these horror stories. The truth is that there are no magic solutions, in some cases loan modifications are simply not an option.

That said, lenders have come up with a kind of formula to speed up loan workouts. If you fit these standards you can get relatively quick help, if you don’t you must wait for the traditional case by case process. Unfortunately there are no guarantees and seemingly great candidates have also been abused by the system, but knowing the system lenders follow to fast track loan modifications can only help.

So what are the requirements?

1) Your loan must be at least 60 days past due. Some banks require at least 90 days. One of the reasons for this is that the bank needs to be sure you really can’t afford the loan. If you are struggling but can make the payments Banks are not going to want to throw money away at a loan modification.
This does not mean I am recommending you to not pay your mortgage payments. Every case is different and in some cases you have more leverage on your bank if you have a good record. Check out www.hud.gov to find out where your closest mortgage counseling office is to get personalized advice.

2) You need to prove you can’t pay your mortgage. Your expenses must exceed your income. Be ready with pertinent paperwork, you will be asked to prove this.

3) The loan modification must be a long term solution. That means the cost of the monthly payments must be under 38% of your monthly income.

4) You can’t be in bankruptcy.

5) A loan modification must be a good deal for the lender. That means that the cost of modifying your loan must be cheaper than what the lenders would lose if they went ahead and sold your home. For instance, if you live in an area where homes did not fall in price and there is a high demand of houses (not sure where that would be, but let’s imagine) then the lenders are very unlikely to accept your lower interest and reduced principal balance requests when they can simply foreclose on the mortgage and sell your home for the same price or even a potential profit.

6) You need to be able to prove that you can make the modified payments and that you will not default again.

Again, these requirements will not guarantee an approval but will increase your chances. The main point you need to get across to your bank or whoever the owner of your loan is, is that you are a good investment. That you are worth more money as a client than your home is worth with a foreclosure.

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Loan Modification Companies, Why Doesn’t Government Want You To Use Them

Andrew — Sat, 14 Nov 2009 22:39:50 +0000

One of my latest articles suggested that the best advice you can get on loan modifications is free and supplied by the Government and that the Government has a vested interest in loan modifications to work, that is to stop families from losing their homes. This elicited an anonymous comment that I feel can be helpful as I believe it touches on many of the issues people are thinking about. The comment is copied in full even though some of the sentiments expressed may have hurt my fragile ego. The readers’ comments are in italics.

“The best advice comes from the government and they have a vested interest in your success.” Really? The best advice comes from the government???? Based on the terrible advice that you are giving I can believe that you may actually believe this but that does not make it true.

Yes, I agree Obama wouldn’t lose sleep over me foreclosing on my home, but I do think he wants this credit crisis to be behind him, to get re-elected and because most people like to do well in a job, few of us like to fail miserably. This does not mean I think he will succeed. I personally believe the whole problem we have now is not so much a mortgage issue, as a credit culture crisis. In many cases mortgage payments are one of the smaller loans borrowers have to worry about. Think credit cards, car loans, refinance mortgages, etc…

The government is not littered with the sharpest minds in America. It is a bunch of people who are trying to get re-elected. Do you really think they are looking out for my best interest? Did you ever stop to think that the banking lobby has the politicians in their back pocket? When you call HUD all they do is give you the number at the bank to call and answer some basic questions. Wow, what a great service they provide.

Again I would have to agree that not all government employees have a Mensa membership card in their wallets. And yes, I am sure the banking lobby has plenty of leverage on this government, just look at how quickly the Government bailed them out when they needed it.

However HUD does provide more information than your banks number. Foreclosure prevention counseling services are provided free of charge by nonprofit housing counseling agencies working in partnership with the Federal Government. These agencies are funded, in part, by HUD and NeighborWorks® America. There is no need to pay a private company for these services. http://www.hud.gov/offices/hsg/sfh/hcc/fc/

However if you feel it is all a big conspiracy and that all these counseling agencies are out to get you and don’t want to help you with your mortgage then it might be a good idea to get your own loan modification “guru”. You know what though? Not all of them are the brightest minds of America either.

Have you ever spent 6 months getting the run around from the bank while you stress out over the possibility of losing your home? Who has the time or mental energy or mortgage knowledge to negotiate with the banks? Do people know how to calculate their DTI or surplus/deficit? Did you know that most lenders have guidelines that are based on the monthly surplus/deficit and if you give them numbers that fall outside of those guidelines at any time during the 3-6 month negotiations or during the 3-6 month trial modification you will be DENIED?

Can you imagine how somebody would feel if they went through hell for 6 months and then when they went through the final financial review after the trial mod they got denied because they got a bonus check or saw their income dip or had an unexpected expense pop up? Who is going to counsel them on how to manage their finances throughout this process and hold their hand in a great time of need… the government….yeah right. At least they have your great articles to fall back on. If you truly want to help people please educate yourself on what you are writing about before you start writing. Which bank do you work for?

I think the key of the issue is that our friend feels (for completely altruistic reasons I’m sure) that loan modification agents are the way to go. We are too ignorant to work it all out ourselves, and the Government is not to be trusted. That is a feeling many share, which is why they will pay thousands of dollars to a loan modification agency to do the work for them.

It is true that for many of us the paperwork required is just too much to deal with when we have work, family and a hundred other things on our mind, but just because you pay for that help doesn’t mean it is going to be better.

You need to decide if loan modifications are worth the trouble at all, some just see them as a trick banks play to get 3 extra months out borrowers.

You also need to decide if paying for a loan modification agency or using a free government issued counselor is the smart thing for you.

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Loan Modification Companies, Why Doesn’t Government Want You To Use Them

One of my latest articles suggested that the best advice you
can get on loan modifications is free and supplied by the Government and that the Government has a
vested interest in loan modifications to work, that is to stop families from
losing their homes. This elicited an anonymous comment that I feel can be
helpful as I believe it touches on many of the issues people are thinking
about. The comment is copied in full even though some of the sentiments
expressed may have hurt my fragile ego. The readers’ comments are in italics.

“The best advice
comes from the government and they have a vested interest in your
success.” Really? The best advice
comes from the government???? Based on
the terrible advice that you are giving I can believe that you may actually
believe this but that does not make it true.

Yes, I agree Obama wouldn’t lose sleep over me foreclosing
on my home, but I do think he wants this credit crisis to be behind him, to get
re-elected and because most people like to do well in a job, few of us like to
fail miserably. This does not mean I think he will succeed. I personally
believe the whole problem we have now is not so much a mortgage issue, as a
credit culture crisis. In many cases mortgage payments are one of the smaller
loans borrowers have to worry about. Think credit cards, car loans, refinance
mortgages, etc…

The government is not
littered with the sharpest minds in America.
It is a bunch of people who are trying to get re-elected. Do you really
think they are looking out for my best interest? Did you ever stop to think that the banking
lobby has the politicians in their back pocket? When you call HUD all they do is give you
the number at the bank to call and answer some basic questions. Wow, what a great service they provide.

Again I would have to agree that not all government employees
are Mensa members. And yes, I am sure the banking lobby has plenty of leverage
on this government, just look at how quickly the Government bailed them out
when they needed it.

However HUD does provide more information than your banks
number. Foreclosure
prevention counseling services are provided free of charge by nonprofit housing
counseling agencies working in partnership with the Federal Government. These
agencies are funded, in part, by HUD and NeighborWorks® America. There is no
need to pay a private company for these services. http://www.hud.gov/offices/hsg/sfh/hcc/fc/

However if you feel it is all a big conspiracy and that
all these counseling agencies are out to get you and don’t want to help you
with your mortgage then it might be a good idea to get your own loan
modification “guru”. You know what though? Not all of them are the brightest
minds of America either.

Politicians tell people not to use loan mod companies
because the banks don’t want people to help them out. Wouldn’t it be great if the person that was
suing you for something was representing them self and you had a great attorney
to help you out?? Have you ever spent 6
months getting the run around from the bank while you stress out over the
possibility of losing your home? Who has
the time or mental energy or mortgage knowledge to negotiate with the
banks? Do people know how to calculate
their DTI or surplus/deficit? Did you
know that most lenders have guidelines that are based on the monthly surplus/deficit
and if you give them numbers that fall outside of those guidelines at any time
during the 3-6 month negotiations or during the 3-6 month trial modification
you will be DENIED?

Can you imagine how somebody would feel if they went through
hell for 6 months and then when they went through the final financial review
after the trial mod they got denied because they got a bonus check or saw their
income dip or had an unexpected expense pop up?
Who is going to counsel them on how to manage their finances throughout
this process and hold their hand in a great time of need… the
government….yeah right. At least they
have your great articles to fall back on.
If you truly want to help people please educate yourself on what you are
writing about before you start writing. Which
bank do you work for?

I think the key of the issue is that our friend feels (for
completely altruistic reasons I’m sure) that loan modification agents are the
way to go. We are too ignorant to work it all out ourselves, and the Government
is not to be trusted. That is a feeling many share, which is why they will pay
thousands of dollars to a loan modification agency to do the work for them.

It is true that for many of us the paperwork required is
just too much to deal with when we have work, family and a hundred other things
on our mind, but just because you pay for that help doesn’t mean it is going to
be better.

The truth is that nobody can really guarantee you anything.
Loan modification agencies can’t guarantee success, although they do have
vested interests in delivering the goods, because it is the bank that approves
or drops the loan modification application. You need to decide if loan
modifications are worth the trouble at all, some just see them as a trick banks
play to get 3 extra months out borrowers. You also need to decide if paying for
a loan modification agency or using a free government issued counselor is the
smart thing for you.

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Loan Modifications Are They Just A Big Scam

Andrew — Fri, 13 Nov 2009 22:37:12 +0000

Preparing mortgage aid programs and loan modification schemes is not easy. Not as hard as struggling with a mortgage you can’t afford and trying to get a loan modification from heartless corporations that simply want to milk the proverbial consumer cow, so I am not expecting any sympathy, but nevertheless it is hard.
The Government has provided a whole variety of programs in order to deal with the different type of struggling borrowers, or have they? I actually believe the government has a vested interest in making loan modifications work, they want to get reelected and people having a roof under which to live is a big part of what makes us feel a government is looking after our interests.

However there is an alternative way of looking at things. Loan modifications are designed so that only after an initial loan modification trial where the borrower proves he can pay the modified monthly payments faithfully does the full loan modification come into action.
This could seem fair and logical. Only after a show of good faith should borrowers get a second chance. The only catch with this reasoning is that banks do not have to show similar evidence of good faith.

Another problem with the loan modification’s program is that while borrowers are asked to pay for their mortgage religiously in the loan trial, the foreclosure process continues unfazed. This is very disturbing. To think that a borrower is lulled into a false sense of security while notices of default turn into repossessions and ultimately evictions while the borrower is sweating blood in order to pay the mortgage on a house that very well maybe hopelessly underwater is tragic.

Some would say that the whole loan modification program can be used by banks to take a failing loan into the process and with Washington’s blessing milk a final three months of payments while offering nothing more than an empty promise.

Although there very well might be some truth in these words I think we might be forgetting the cost of processing a loan modification for a bank, the paperwork, the time and the paperwork involved make loan modifications expensive. In fact many believe that foreclosures are actually cheaper than loan modifications for banks. It would be interesting to know if this is still the case if we put three extra mortgage payments into the equation.

Before we get too emotional, many of us get ourselves into trouble by over borrowing and over spending on overprized homes. Foreclosure could in these circumstances be the reasonable route.

Whatever may be the case how sad that loan modifications could, by error or design, end up being simply a way of milking struggling borrowers from an extra three months of payments before foreclosing their homes.

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Loan Modification Alternatives: Wells Fargo Interest Only Loans

Andrew — Mon, 09 Nov 2009 21:02:59 +0000

Big Banks are in trouble as more and more families are unable to pay their mortgages. The problem is that troubled homeowners are no longer the “typical” borrower with subprime loans with high interest rates. High unemployment is creating a whole new demographic of troubled borrower with “good” loans they can simply not afford anymore.

Another problem is the existence of billions of dollars in option-adjustable rate mortgages which are a totally different ball game to subprime mortgages or prime mortgages.

Wells Fargo & Co. the fourth largest U.S bank is a good representative of this situation with over $107 billion in option adjustable mortgages. This loan product is as typical as it gets in housing boom “crazy” products. Option adjustable mortgages allow (or allowed, not many are sold anymore funnily enough) borrowers to make small monthly payments in return for increasing their mortgage balance. This effectively allowed borrowers to choose how much to pay as their monthly mortgage payment. The result was that many of us fell for the belief that the housing boom would never end and that our homes would continue to increase in value offsetting any increase in mortgage balance due to small monthly payments below the cost of interest.

The problem now, of course, is that many Pick-A-Pay borrowers own homes that are worth much less than what they owe in mortgage debt and just about as many can’t afford a monthly payment that will pay off any of the mortgage principal.

What can banks do? Wells Fargo is taking one big gamble by issuing interest only loans in the thousands. These interest only loans will defer borrower’s balances for up to 10 years. The gamble is that housing prices and consumers income will rise, especially in the hardest hit parts of the country, and cover the billions of dollars in underwater debt.

Although borrowers that are struggling to pay their mortgages and fear losing their homes will probably be happy to take anything that will keep them afloat during these hard times it is hard not to see this measure as a very high risk one. One newspaper compared this “solution” as a game of kick the can down the road where the “problem” is kicked into the future hoping it will disappear. However with loan modifications hardly making a dent into the number of homeowners facing foreclosures it is hard to see many better alternatives to these extreme measures.

If you own a Pick-A-Pay mortgage and are struggling to pay enough to reduce your mortgage principal it is paramount that you get good personalized advice. The best advice comes from the government and they have a vested interest in your success. You can call HUD for approved housing counseling at 239 434-2397 or visit www.hud.gov.

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Loan Modifications Back To Basics

Andrew — Sun, 08 Nov 2009 00:41:42 +0000

Loan Modifications can seem complicated to many of us. Especially when we are dealing with the stress of losing our home and we are presented with a seemingly endless list of requirements and forms to cope with. It is easy when writing many articles on a specialized subject to assume that everyone knows what you are talking about, that everybody is familiar with what HAMP, TARP, a servicing company, short sales and foreclosures are.

If you are an expert in loan modifications what on earth are you doing reading an article titled Back To Basics, if not this article is for you. This article will explain the big picture loan modifications are currently set in and the basic terms you must be comfortable with.

Who is the owner of your mortgage? Knowing who owns your mortgage is vital. This is not as easy as it sounds. Often the bank or institution you bought your mortgage from is just a handler, a servicing company that sells mortgages and collects payments on behalf of an investor. We will not go into detail with how mortgages are bundled and sold but it is enough to say that it is probably more complicated than you expect so it pays to approach your lender or mortgage servicer with large amounts of patience and an open mind. It is also a good idea to become somewhat of an expert on the subject so you can at least ask the right questions and know when you are being taken for a ride.

The Programs.
Facing mixed feelings and responses from the public the American administration has started many programs and measures to modify loans and make them more affordable for troubled homeowners. There are two main programs, the HARP program (Home Affordable Refinance Program) and HAMP (Home Affordable Modification Program).

HARP is for homeowners that are current on their payments but have not been able to take advantage of the current lower interest rates because the value of their home has dropped and they are not able to refinance their mortgage. In order to qualify for HARP applicants must have mortgages owned or insured by Fannie Mae or Freddie Mac.

HAMP is by far the most widely used program. Any servicing company is eligible. The government provides incentives to investors and borrowers if a loan modification is successful. The purpose of HAMP is to bring mortgage payments down to 31% or less of a family’s monthly income. This program requires homeowners to have a job and be able to pay for a reasonable mortgage payment. The first step you must make with HAMP is to qualify for a three month trial loan modification. Once you have gone throught the three months without missing a payment you can qualify for a full loan modification.

HAMP reduces loan payments with three main methods: 1) Reducing interest, 2) Extending the mortgage term up to a maximum of 40 years and 3) Forbearance of principal and allowing for a ballon payment at the end of the mortgage.

Don’t pay for help, it is free!
It is importance not to fall for loan modification scammers no matter how much you hate paperwork. The best advice comes from the government and they have a vested interest in your success. You can call HUD for approved housing counseling at 239 434-2397 or visit www.hud.gov.

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Loan Modifications Scrutinized, 1340 Loan Modifications Investigated in California

Andrew — Thu, 05 Nov 2009 22:41:05 +0000

The numbers of loan modifications, foreclosures and bankruptcies we are dealing with in this credit crisis are so large they are too often hard to understand and digest. A good solution is often to downsize and see if more sense can be put into smaller models. A good model for the United States is California, the fourth economy in the world and one of the hardest hit states in the United States credit crisis. House prices have free fallen but mortgages remain the same. This has eaten up most of people’s equity leaving homeowners owing more on their homes than they are worth. Not exactly an incentive to pay your mortgage.

The sad thing is that while only 16% of eligible homeowners have received a trial loan and the vast majority of troubled homeowners are desperately trying to save their homes unscrupulous people try their best to make a profit from other people´s misery.

This is illustrated by the 1,340 open investigations into loan modification scams while last year there were only 10 in August 2008. It is quite depressing that people are willing to make a business from robbing borrowers from their last reserves of relocation cash.

This growth in loan modification investigations has caused 330 desist and refrain orders just in the past year, up from the average 80 to 100 orders last year. As depressing and upsetting as these numbers are it is not surprising that when 225,000 homes foreclosed in the State of California last year budding entrepreneurs with varying sense of morals and business ethics show their ugly faces.

For many of these scam artists, orders of desist and refrain are simply an inconvenience that they must endure in order to do business. Current economy projections estimate this situation will continue for at least 2 years, time during which homeowners will continue to be victimized.

One of the reasons for this is that real estate agents are struggling to find work and many are reinventing their career by offering loan modification services. Last year 185,000 people took the real estate licence exams in California alone while this year 25,000 are projected to apply. That is still one real estate agent for every 54 adults in California. Such a concentration of real estate agents is bound to create a pretty competitive work environment where agents are willing to bend and break rules.

The good news is that states like California are projected to make a comeback soon. In fact estimates predict that Orange County houses will increase in value by 9.5% by next year.

The only solution when the economic atmosphere is so charged and there are such an abundance of con artists is to get smart and learn how to avoid getting cheated by unscrupulous loan modification agents.
The best advice is always to contact the government and apply for personalized (and free ) advice on the best course of action for you and your family.

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Loan Modifications, 5 Things the Government Is Not Doing But Should

Andrew — Wed, 04 Nov 2009 19:28:56 +0000

Mortgage foreclosures are increasing steadily as home values plummet and layoffs are becoming ever more common while homeowners crumble under the weight of mortgages they can no longer afford.
The administration is working hard to increase the number of loan modifications to help out struggling homeowners. However higher unemployment rates are making it hard for homeowners to afford even good prime mortgages loan modifications struggle to improve. Also, foreclosures often prove to be a cheaper alternative for mortgage providers when the real cost of loan modifications is calculated.
So what can be done to fix this situation? Although far from total solutions I will put forward five possible measures. Some would be unpopular, others hard to implement but the truth is that easy fixes are just not there to be found.
1) Mandate Loan Modifications.
Up to now the government has tried to court mortgage providers into making loan modifications. Providing incentives and often footing the entire bill of loan modifications. This could be changed if the administration regulates foreclosures and makes it a legal requirement for banks to offer modifications before they can foreclose a loan or mortgage.
2) Provide Principal Reductions on Existing Loans.

Unless you actually reduce the principal (amount borrowed) of a loan you are not really helping, just lengthening the loan and making it harder regain equity on the home. Equity is the best incentive for homeowners to pay their mortgage payments. If you feel your home is worth more than you owe on it you see it as an investment worth protecting that you can sell at a profit if things get real bad.

3) Ease Accounting Rules for Loan Modifications.

Messy accounting procedures and bureaucracy’s red tape is responsible for much of the cost of loan modifications making them hard to enforce and expensive to make. Even the 500,000 plus loan trials the HAMP program has managed to make ahead of schedule will have to undergo further paperwork and potential bureaucracy pits once the three month trials are finished which will probably cause many of the loan trials to fall through.

4) More Transparent and Uniform Loan Modifications Reports.

Every bank or mortgage provider seems to have their own system to measure eligible borrowers and how they report their loan modifications. This makes it difficult to set uniform procedures, require targets and regulate the efficiency of loan providers.

5) Limit Fees For Borrowers.

Fees charged to borrowers are so high that even if a homeowner falls in difficult times for brief period he/she can fall into a spiral of debt due to the high fees and penalties he or she incurs. Also, loan modifications tend to include expensive fees for the homeowner just to apply for.

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