Loan Modification – For You?

 

Have you applied to your financial institution for a Loan Modification?  What do you need to know? – And how do you do it? – I’ll tell you, because it’s imperative at this moment!!

Do you have a variable rate mortgage?  I have been talking a whole lot lately about interest rates…because they are the horror story of the financial markets.  And if you have a variable rate mortgage…the ‘Baddies’ are stalking your property.  Your security of homeownership is being preyed upon right now.

You don’t have to stop paying your mortgage in order to apply for a Loan Modification – or you may be one of the millions of Americans who simply can’t pay because the cost of home ownership is out of whack with your monthly income. 

The ‘Baddies’ are the avalanche of government borrowing to finance deficit spending – and there is no power on earth that can stop the coming higher interest rates.  Your mortgage is probably still some of the lowest in rates that you have experienced – and a ‘perfect storm’ is brewing for variable mortgages to sky rocket.  Yes!!…loan modification to a fixed rate of interest is what you are after so you don’t lose the comforts of your abode.

To whit…the Federal Government created the HAMP program (Making Home Affordable Plan) – and here are the particulars.  I am attaching a full description of the Program and Application that you submit to your Lender with this Newsletter.

For HAMP:   Is this your primary residence, did you get your mortgage before January 1, 2009, is your current mortgage payment more than 31% of your income, is your mortgage $729,750 or less, and can you document a hardship???  Answering ‘yes!’ to these qualifies you. 

The Comptroller of the Currency regulates most financial institutions and is overseeing that Lenders participate in this Government program.  If the investor for your mortgage (which is generally not the banking institution that you deal with) – is Fannie Mae or Freddie Mac – they must participate.  You can find this out.

Loan modification can result in an interest rate reduction – sometimes as low as 2% — and can provide a fixed rate of interest for the term of your mortgage….this will drive the ‘Baddies’ away.

What do you do if your mortgage is more than $729,750 – which is a California real estate problem where I live – and my mortgage is higher than this amount.  And, there are other programs offered depending upon your financial institution.

I did not qualify for HAMP.  My Lender is one of the toughest – Wells Fargo.  My mortgage is not held by Fannie/Freddie (like 90% of all mortgages) – it is held by a private investor.  And, I was absolutely determined (with my background in the bond market and knowing the tidal wave that interest rates can cause) – to convert my variable rate mortgage to a fixed rate.  It is a ‘must’ today!

I saw… that while the Loan Modification process is a grueling one…rising interest rates could swiftly wash my house out to sea. 

Wells Fargo finally accepted me into the Loan Modification process by offering me a Forbearance Agreement.  This took persistence and determination – and the Lenders and Bankers see this wall of variable mortgages coming their way – with the calamity of uncontrollable interest rates….yikes!

When I started openly talking about my personal loan modification circumstances – I was so surprised to find out that nearly everyone that I talked to was either in modification, thinking about it – or fighting for a result.  Who ever thought that these conditions would persist – and who ever thought that it is just not one of us, but most of us, who are fighting the tides??

The Forbearance Agreement gets me started on paying a reduced payment on my mortgage.  In my case it is half.  While in Forbearance the good news is that any foreclosure process is stopped.  This is a trial period of paying the specified amount for three months – before the mortgage investor confirms a permanent loan modification.  All of my friends in loan mod report this same process – three months of payments – and then more review by the investor moving to a permanent fixed rate agreement.

Where do you start?  Get wise about interest rates. The application is enclosed for the HAMP program.  Submit it to your Lender with the backup documents.  Call them and tell them that you are requesting that they make your mortgage payments more affordable.  Ask about their process and how you qualify.  Hey…don’t take it personally – they may even reject you several times – just persist and ask again.   And know that it will take work – but that it is very much worth it to secure a fixed rate of financing.  We’re rooting for you!!

Please pass this Article along to your friends and family – use the Twitter and Facebook links next to the Article – and help others in these times as well!!

Please add your experience by commenting to this article on our website.  We want to hear from you and know what you need to know and what you’ve learned. 

The Application for this can be downloaded Here