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Principal Reduction Programs – What Are Your Options?

House inside of a fishbowl symbolizing underwater mortgageUpdate – Homeowners who have Bank of America as their lender may get a big surprise in the mail soon… An offer to reduce their principal mortgage balance by as much as $150,000!

In a recent settlement with the with state attorneys general and the U.S. Department of Justice,  Bank of America committed over $11 billion to reducing principal balances via their principal reduction program.

Here is what you need to know if you have B of A as your lender:

This program is real! Do not discard your letter if you get one, you will not be eligible anymore if you do.  The letters are being sent via certified mail and are clearly from B of A, unlike the advertisements you may have received from companies if you were late on your mortgage payments.

This brings up another good point, the letters are going out to homeowners who are 60 days or more late on their mortgage payments.  The reductions are said to reduce payments by up to 35%, so this is a targeted effort to help those homeowners who have tried other options and they simply have not worked.

In addition to being late on your mortgage, homeowners also need to have an income.  You have to be able to show you can afford the new mortgage payment if your balance is reduced.

Borrowers homes also have to be “underwater” to qualify.  This simply means your home would have to be worth less than you owe on your mortgage, which is very common for many homes purchased in the last several years.

Here’s the deal – 200,000 letters are being mailed out to various homeowners who Bank of America determines qualify (by using a net present value test to determine if the reduction of principal will save over foreclosure for investors).  This means you have to just sit back and wait for your letter to arrive, right?  Maybe not?  BestMortgageLoanModification.com says “Many borrowers don’t realize you can call certain departments from B of A and determine if you are eligible for the principal reduction program rather than waiting for a letter to arrive.  We have had instances where a borrower calls us looking for a HARP refinance and we see they have lates, which makes them ineligible for the program.  We have directed the borrowers to call B of A directly and inquire about the reduction program, which has resulted in some borrowers receiving confirmation over the phone that they do in fact qualify. They are ecstatic when this happens!”

If you meet the criteria above and would like to see if you qualify for the program,  why not give B of A a call and see if you are a candidate?  The worst that can happen is they say “no”, while on  the other hand you may be able to get a principal reduction up to $150,000!

While this deal was part of a settlement, B of A has stated that they will reduce more than the $11 billion dollars in mortgages if more people respond to the letters than expected.  This is a wonderful opportunity for homeowners who are struggling to make their payments.  Time will tell if other lenders will jump on board and begin to offer reductions on their own without legal action, but if this program is a success it may very well happen much more than it currently does.

End update

Principal reduction programs are a highly sought after option for homeowners who find themselves in an “upside down mortgage.”  There are a lot of scared and frustrated homeowners doing everything they can to keep their homes. Read More…

Loan Modification Programs That Work – An Overview of Options For Homeowners

loan modification programsThere are many different types of loan modification programs out there today.

For the most part, you have a couple options depending on your lender. These are outlined below.

Almost every lender has an in-house mortgage modification program. This is simply your lenders own program that is approved under their own guidelines. Every lender is different, so every in-house program is a little different as well. They are often very similar to government programs described below. Most people apply for a government program with their lender and if that is rejected, apply for the in-house loan program.

There are also a government sponsored loan modification programs. These guidelines were set by government agencies and are used by many lenders, but not all participate.

Watch the video to your right if you are thinking of a government program or have been offered a “trial” loan modification. It is a great eye opener for homeowners.

Clearly, you can tell from this video that the banks are not always on your side. Be very wary of any home modification program you are approved for by your lender, especially of ones that include “trial” payments. It is always a good idea to have an attorney review your agreement before you sign it if you are doing this on your own.

With the government programs, if you qualify your monthly payments are reduced to 31% of your monthly income. This is accomplished by reducing your interest rate as low as 2%, extending the length of your loan and reducing your principal balance.

The government programs are the most sought after loan modification programs available.  For those who do not qualify for these programs (for example your mortgage payment is already less than 31% of your monthly income), an in house lender option is usually the next step to take.

Now, while some people were affected negatively in the above video, there are many thousands of people who have been approved and have modified their mortgages.  Here are some of the programs they have personally used: Read More…

Behind On Your Mortgage Payments? Here Are Your Options

behind on mortgage paymentsIf You’re Behind On Mortgage Payments – A Loan Modification Plan Could Help You Save Your Home

The economic climate in the U.S. is putting a financial strain on many households.  Many  homeowners due to a variety of reasons…including job loss and the inability to find new… jobs are finding themselves late on their mortgage. Still others are gainfully employed but the cost of living and other expenses keep rising at a faster rate than their salaries.

The American Dream of home ownership is becoming a “nightmare” for many homeowners. Most are terrified at the possibility of losing their home.

If you are struggling to pay your mortgage you should consider looking into getting a loan modification. This may be a viable solution to your problem.  In fact, most lenders will only offer a loan modification to those who are behind on their monthly payments!

What Is A Home Modification?

Basically a loan modification allows the terms of your mortgage to be changed to make it easier for a homeowner to continue to pay a mortgage by reducing your monthly payment.  For example a lender may reduce your interest rate, offer you a different kind of loan or even change the length of time you have to repay.  If you are behind on your mortgage payments, a modification can even bring you to current status. Read More…

Wow! Bank of America Is Sending Out Principal Reduction Invitations – Who Gets One?

Here is the American FlagAs you all know, people all over the United States are having problems with paying their mortgages. In fact, millions are impacted and they are in the process of losing their homes because they may be too far behind to catch up. These financial problems apply to virtually every financial institution in America.  However, banks like Bank of America are actively seeking ways to provide viable solutions to these immediate issues. For example, Bank of America is offering 200,000 homeowners an opportunity to reduce the principle payments on their home loans. These 200,000 owners are scheduled to receive a letter in their mailboxes them a chance to participate in this program.  Although many home owners are receiving the letter, others want to know the answer to the question, “How do I get a letter?”

The offer is available to this select group of borrowers but there are several eligibility requirements that must be met before the mortgage is reduced. Some of the eligibility requirements include a specific amount of time late (at least a couple months), owing more than the home’s current value (underwater),  BofA has to be the loan owner or service provider, to name a few.

Do you have to be late on your payments? Read More…

Mortgage Loan Modification Calculator – Estimate Your Monthly Savings

mortgage loan modification calculatorMany people want to get a home loan modification, but have no idea how much money they will save if they were to be approved.  Don’t waste your time, read on…

The fact is, many homeowners payments actually go up with a modification.  A typical scenario goes like this:  A person got their loan a few years ago and it was an interest only loan.  The loan is about to adjust, so they realize their payments are going to increase.  They apply for a modification and after weeks of paperwork and calling their lender they learn that their new payment is going to increase with a modified loan, not helping them at all!

Why?  Because the new loan terms give them an interest rate of say 4%, which we all agree is higher than 0%, making their payments go up.

Another scenario is where the homeowner does not have their property taxes and insurance impounded into the loan.  When you get a modification, these are included in the payments, making your monthly payments higher than they were before.

Well,  for those people who are looking to modify, they can now use our free loan modification calculator and determine how much they will save before they apply.   You just enter in a few details (you should know these off the top of your head, no need to search through paperwork) and our mortgage modification calculator will tell you if you would qualify and how much your modified payment would likely be.

The calculator uses the Governments Home Affordable Modification Guidelines to determine your payments.  There is no guarantee you will be approved for this program, but many lender do participate in it.   Many lenders have their own in-house modification guidelines which are usually pretty similar the the governments program.

Here is the Mortgage Loan Modification Calculator:

 

Click the continue button above to input your data, the next page shows your monthly savings! Read More…

No Upfront Fee Loan Modification Companies And How They Work

no upfront fee loan modificationAre you looking to get a home modification, but don’t think you can do it on your own?

This happens all the time and loan modification companies can be a big help.  The problem is, some companies want to charge upfront fees to perform their services.  What happens if they don’t get your modification approved or their company goes out of business?  You don’t want to know!

The solution is to choose a company that does not charge upfront fees.   This way, you only pay if your mortgage modification is approved. If you qualify, they will be able to get you into the program for your unique situation.  This usually means, the lowest possible monthly payment so you can once again relax.

The best companies can use this business model because they know how to get home loan mods approved.  They just have to pre-qualify you to make sure you are a good candidate for a modification before they can take you on as a client.  This process typically entails asking you a series of questions to see if you fit into the proper modification guidelines.  Do you have a financial hardship?  Has your interest rate increased? Is the home your primary residence?  These are all the types of questions they must ask you. Read More…

How To Get A Wells Fargo Loan Modification Approved

wells fargo loan modificationMany homeowners in the U.S.  simply could no longer continue to pay their mortgage with Wells Fargo.  Many of these homeowners tried to get a home modification to reduce their monthly payments.  Others chose to do nothing at all and just let their homes fall into foreclosure.

The problem is quite prevalent today in America.  Several lenders and servicers are in the midst of lawsuits for alleged predatory practices.   The stories are almost identical from one lender and servicer to the next.  Allegedly, lenders and servicers purposely made the modification process appear to be working for homeowners.  Even going so far as to telling them their applications were fine and that there was nothing to worry about.  Never telling the homeowner how the loan modification really works.  This has not been the case with Wells Fargo (as far as we know), they seem to really help homeowners in need if you follow the right steps.

In fact, I personally know people who have had a really easy time getting Wells Fargo to modify their loans.  They did their research, prepared their documents the right way and were accepted into the Wells Fargo mortgage modification program without any problems at all.

One person I know must have had lady luck on his side, because he not only received one Wells modification, but TWO!  After losing even more income during the initial home modification, he applied and was granted a second modification.  The second modification actually brought down his principal balance over the course of three years.  It was the first time I had ever heard of such a program and I applaud Wells Fargo for offering it out.  The homeowner was EXTREMELY happy, he told me “Lucas, I just got the best loan modification anyone has ever seen”.  I don’t know if this is an isolated case, or Wells is actively pushing principal reductions, but lets keep our fingers crossed that they keep this up. Read More…

Are You Trying To Get a Wachovia Mortgage Modification Approved? Must Read Info…

wachovia loan modificationThe Wachovia Bank is one of a number of banks that currently have many loans in default.  To combat this problem, they have embraced loan modification programs to help struggling homeowners.  The Wachovia Bank provides these services to its loyal and eligible customers to help them end their financial struggles. They offer in-house  programs as well as government sponsored programs.

Wachovia is of of the few banks that are known for actually getting mods done relatively fast. This not only helps homeowners stay away from foreclosure, but also helps the banks reputation.  There are many borrowers that had been unsatisfied with their mortgages or had been unable to pay the mortgage anymore.  Wachovia responded and updated their mod programs.  Now the bank is all prepared to be able to analyze and approve modifications.  This doesn’t mean that you should rush to call them and try to get approved, you must first do some research and get your paperwork in order.

What kinds of programs do they offer?
Wachovia mortgage modifications utilize both government and lender specific programs.  Both of these are relatively similar to qualify for.  They even have a few programs that do not require as much paperwork, which shows they are open to modifications and willing to help. Read More…

The Obama Loan Modification Program Explained

obama loan modificationThe Obama Loan Modification program has been in effect for a number of years now.  Billions of dollars were set aside to assist homeowners with mortgages they can no longer afford, and to stimulate the economy.  But, millions of homeowners have yet to take advantage of this loan modification program.

What Is The Obama Loan Modification Program?

It was created in 2009 to help homeowners reduce their monthly mortgage payments and  avoid foreclosure. The initial goal was to help 3 – 4 million homeowners with their mortgages.  That is still the goal today.

If you are qualified, this program may help you to lower your mortgage principal, lower your monthly mortgage payments and lower your interest rate.
The biggest snag has been qualifying homeowners for loan modifications.  In a recent speech President Obama announced he would work with various federal agencies to make the program easier for more homeowners to qualify.  As it stands, the current qualifications required still apply.  While many homeowners have been helped out by this program, there are millions more that still need help.
Should You Still Apply For The Obama Loan Modification? Read More…

Loan Modification Tips To Increase Chances of Approval

loan modification tipsIf you’re considering a loan modification to keep your home from going into foreclosure, now is an excellent time to begin the process.

It may seem like a daunting task at first.  You may even feel overwhelmed and have no idea where to begin.  But the most valuable loan modification tips center around providing the proper documentation.

In order to increase your chances of getting approved it is absolutely imperative that you provide all of the documentation the lender requests.

Be Sure Your Application Is Complete

This may seem obvious to most, but it’s common that someone will fail to fill out their loan modification application completely.  This can grind your application process to a screeching halt.  In some cases your application can be denied.  Double check your list of required paperwork and make sure you have sent it all in.

What Documentation Should You Have?

  • Hardship Letter
  • Documents to back up your financial hardship claim.
  • Federal income tax returns and W-2′s for the last 2 years (This can be obtained electronically once you give permission by filling out the required form)
  • Pay stubs
  • Income Expense Worksheet

This is by no means a complete list.  It is provided to give you as a general idea of the kind of documents you will be required to have.  You should consult with your lender for a more complete list.

Before You Apply Make Sure You Know Your Debt Ratio Read More…