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Loan Modification Outlet offers mortgage modification relief for homeowners that are struggling with an adjustable rate mortgage or an employment issue that caused a loss of income. LMO offer loss mitigation solutions with low rate loan modifications that stop foreclosure!

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Many homeowners have expressed concern recently as there has been a lot of talk that mortgage companies won’t be offering loan modification agreements much longer. As the economy and housing sector improves the less likely lenders will be to offer relief to distressed homeowners. The HARP mortgage has been able to help a lot of people that are stuck with upside-down loans.

The Federal Reserve and FTC continue to warn about “loan mod scams.”  If companies are charging fees up front for loan modification services then they are breaking the laws.

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Since the housing market collapsed in 2007, the government, banks and mortgage lenders have created hundreds of loan modification programs in an effort to stem the foreclosure crisis and to get the U.S. economy back on track. The Obama administration’s initial mortgage relief programs, launched in early 2009, were intended to prevent 7 million to 9 million home foreclosure. So far, they have been able to extend mortgage help to nearly 2 million, and not all of those are out of risk of a loan default. Many homeowners have struggled to refinance a bad credit mortgage because they don’t have the equity or they are unable to meet the credit score requirements because of delinquent mortgage payment or mounting credit card debt.

Mortgage Modification Programs with Good Intentions

Many of the mortgage loan modification programs that begun later also have faltered. One loan mod program intended to help at least 500,000 has helped just a few hundred a year after its launch. Another initiative to extend $1 billion to help the jobless or underemployed avoid foreclosure ended in September, obligating less than half of its funds. The money that was not distributed had to be returned to the U.S. Treasury.

As of November 30, the government had spent just $2.8 billion of the $46 billion war chest it had in 2009 to devote to the housing crisis, the Treasury Department says. More has been committed, but only $13 billion will ultimately be spent, the non-partisan Congressional Budget Office estimated in March.

The Obama administration announced new guidelines with the HARP 2.0 that promised no Loan to Value restrictions. This home refinance program is only available to underwater borrowers who happen to have a mortgage owned by Fannie Mae or Freddie Mac.

Meanwhile, 2.5 million homes have been lost to foreclosure since 2009, an additional 4 million are in the home foreclosure process or seriously delinquent and home prices are still falling in much of the U.S., shrinking household wealth for millions of Americans. “Every loan modification program has fallen far short of goals. I can’t think of one that’s been largely successful,” says John Dodds, director of the Philadelphia Unemployment Project, a nonprofit that’s been involved in foreclosure prevention for decades.

The Obama administration’s programs were hampered by failed refinance options and loan modification program flaws, their reliance on a home loan industry overwhelmed by the fallout from a historic collapse in home prices and a brutally extended housing downturn. Nor could they always overcome the conflicting interests of borrowers with too much debt, mortgage lenders unwilling to surrender profits and home loan servicers with sometimes greater financial incentives to foreclose on loans.

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In most case, lenders will not offer refinancing to borrower’s when their hоmе is worth less than their mortgage balance. In the years between 2003 and 2006, many home buyers got a second mortgage when they purchased their home in an effort to avoid having to pay mortgage insurance or a more significant down-payment.  In most cases these 2nd mortgage liens were home equity credit lines that had a variable interest rate that was a few percentage points higher than their 1st mortgage rate and their was often a hefty pre-payment penalty attached as well.  This is one of the reasons that the 2nd mortgage default rate has surged in the last few years.

Today it is difficult to qualify for home refinancing unlеss уоu hаvе sоmе equity іn thе property. Ноwеvеr, іn 2009, thе United Ѕtаtеs federal government announced а nеw initiative called thе Making Ноmе Affordable Program (MHAP) thаt aims tо help struggling homeowners refinance thеіr houses еvеn іf thеу hаvе nо equity. Undеr thе plan уоu саn refinance уоur hоmе еvеn іf уоu hаvе negative equity, also known as an underwater mortgage. For the most part, banks have been pretty good about offering mortgage help to struggling homeowners.

Underwater Home Loan Refinancing

When уоu borrow money аgаіnst уоur hоmе, уоur lender secures thе debt bу placing а lien оn уоur property. Іf уоu fail tо repay thе money, уоur lender саn foreclose оn уоur hоmе аnd sell іt tо raise funds tо pay оff thе mortgage. Legal fees саn quісklу mount uр durіng thе foreclosure process, аnd bесаusе thе costs involved аnd thе risk thаt уоur property vаluе mау fall, lenders typically dо nоt allow уоu tо borrow 100% оf thе house vаluе whеn considering a refinance. Ноwеvеr, bесаusе оf thе housing crisis thаt continues to plague our economic recovery, thе government decided tо intervene аnd encourage lenders tо offer unconventional mortgage refinance loans аnd modification agreements.  Back in 2009 and 2010, loan modifications were more accessible. Today, many of the lenders have tightened their mortgage modification requirements.  Lenders like Chase continue to provide loan modifications in high volumes but banks like Wells Fargo wants to avoid re-defaulting situations that have been occurring at a high rate.

The government-sponsored Fannie Mae аnd Freddie Mac buy thе majority оf thе home mortgage liens written іn thе United Ѕtаtеs. Аs раrt оf thе Ноmе Affordable Refinance Program (HARP), bоth entities offer refinancing solutions tо people whоsе liens thеу hold. Wіth а HARP mortgage, а homeowner саn refinance аn existing mortgage еvеn іf thе nеw loan amounts exceeds 125% оf thе property vаluе. Initially, the Home Affordable Refinance would cap the loan to value restrictions at 125%, but last month the Obama administration announced sweeping reforms with new HARP guidelines in an effort to extend more payment relief to homeowners that were struggling nationally because of their underwater mortgage. Unfortunately, yоu are not allowed to refinance уоur loan undеr HARP іf уоu hаvе а government insured mortgage, suсh аs а loan backed bу thе Federal Housing Administration (FHA) оr Veterans Affairs (VA).

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The Obama foreclosure prevention plan is coming under fire this week from members of Congress. This heralded loan modification program slated to aid 3 million to 4 million homeowners in an effort to extend loan relief while helping homeowners divert foreclosure. Unfortunately this government loan modification program have fallen far short of that goal, and now a handful of Republican Congressman are reportedly ready to introduce legislation to eliminate it.  It should be noted the Bush and Obama administration have made serious attempts to stem the foreclosure crisis with numerous mortgage relief initiatives.

TARP Watchdog Says Loan Modification Plan Is Failing

Scores of homeowners aren’t getting help they qualify for, says Neil Barofsky, who is stepping down. The HAMP loan modification program was designed to lower interest rates and mortgage payments for struggling homeowners, and it has worked for around 600,000 people across the country. But critics say it should be reaching a lot more people. As lenders continue to tighten refinance loan guidelines, more and more homeowners will be in need of mortgage relief.

There are “3.3 million families who might have been reached by this program if only it had been better designed, better managed and better executed by the Treasury department,” said Neil Barofsky, the special inspector general installed to oversee the government’s bank bailout efforts. Speaking at a House hearing Wednesday, Barofsky responded to questions from North Carolina Republican Rep. Patrick McHenry, who recently introduced the legislation that would end the program. [There are] 3.3 million families who might have been reached by this program if only it had been better designed, better managed and better executed by the Treasury department.

A recent Nation Public Radio article revealed some interesting insight. TARP special inspector general, gave his thoughts regarding the Home Affordable Modification Program. Neil Barofsky has been critical of the Treasury department for not doing more to make the program work better and reach more people, and for not offering a current estimate of how many homeowners the program will actually reach. “It is somewhat shameful that at this point — here we are in March 2011 — and the Treasury department will in one breath say that, ‘Well, we know the number is not going to be anywhere close to what we originally said it would be,’ ” Barofsky said, “and then in the second breath refuse — I mean, this is such a basic failure in transparency, to refuse to tell you what their expectation is as to the total number that are going to receive permanent modifications. It evades accountability, and it’s trying to cover up a program that is clearly a failure.”

The Treasury department and Barofsky both agree that the banks and mortgage service companies have not been doing a good job.  Barofsky said. “But Treasury has done nothing to punish or penalize these loan servicers.” It would cause a huge amount of damage to a very fragile housing market and leave hundreds and hundreds of thousands, if not millions, of Americans without the chance to take advantage of a loan modification programs that enable homeowners to keep their homes.

Treasury Secretary Timothy Geithner said it would “cause a huge amount of damage to a very fragile housing market and leave hundreds and hundreds of thousands, if not millions, of Americans without the chance to take advantage of a mortgage modification that would allow them to stay in a home they can afford.”

According to NPR, Barofsky was critical, but did not of call for the Home Affordable Modification Program to be eliminated. Instead, he has long called for the Treasury to fix the program so it will help more people.

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Second Mortgage Elimination

16th February 2011

With the government continuing their politically correct stance of forcing banks to offer loan modifications to struggling homeowners, there has been very little talk about mortgage refinancing and lien stripping.  These are viable solutions to homeowners who want to eliminate their second mortgage.  While lenders are handing out 1st mortgage modifications like cup-cakes, many lenders are resistant to extend second mortgage modification programs because the re-default rate is so high.  The first recommendation for homeowners should be consolidating the first and second loans together.  FHA mortgage rates continue to be appealing below 5% and the fixed rate FHA programs are flexible with credit and equity.  For those that do not qualify for refinancing, second mortgage lien stripping has become an attractive alternative.

In a recent report, the Congressional Oversight Committee admitted the government’s HAMP loan modification program has failed to help enough homeowners to correct the housing crisis. The vast majority of loan modification requests fail, in part, experts believe, because banks have balked at offering a reduction in mortgage principal, the most effective way to halt costly foreclosures. Fannie Mae and Freddie Mac immediately proclaimed, however, that they remain opposed to making this option available to struggling homeowners. Protecting the interests of the banking industry over the consumer, the Federal Reserve also blocked new foreclosure regulations that would have reined in foreclosure abuses.

Although the economic collapse of 2008 has caused the tide to rush in on everyone, there has been no bailout for the “little guy.” Left to fend for themselves, increasing numbers of homeowners are turning to a little-known provision in the federal bankruptcy law, which permits the discharge of a second or even third mortgage in its entirety in a Chapter 13 bankruptcy. The American Bankruptcy Institute recently reported that Chapter 13 bankruptcies have risen by 9 percent in 2010 compared to last year.

Flying under the media radar, the right to discharge a second mortgage in a Chapter 13 bankruptcy provides a glimmer of hope to homeowners stuck with a foreclosure because they own a home they can’t afford and can’t sell. With one in 10 Americans out of work, while others have suffered a pay cut as a condition of keeping their jobs, the amount of disposable income available to pay a mortgage is not what it used to be. Getting rid of a 2nd mortgage payment can sometimes make the difference between keeping a home and losing it to a foreclosure. How then does a homeowner qualify? Quite simply, when a home is worth less than the balance of a first mortgage, federal bankruptcy law — at least in most states — permits a homeowner to treat a second mortgage like an unsecured credit card and discharge it in a Chapter 13 bankruptcy. Read the original Huffington Post article, written by Richard Gaudreau.

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Loan modification agreements and stalled foreclosures appear to be the current trend with the banks.  Underwater mortgages have become a significant issue and that’s why HUD committed 1 billion dollars to the Emergency Homeowner Loan Program. Attorneys general from 49 states have agreed to coordinate efforts to investigate the nation’s foreclosure mess and determine whether servicers violated state laws by cutting corners when filing their paperwork.  Learn more about HUD’s new mortgage relief.

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Chase has offered more than 900,000 mortgage modifications to struggling homeowners since the beginning of 2009 through a wide range of government and Chase initiatives to address the housing crisis.  “We have worked directly with homeowners as the economy has hit them far deeper and for far longer than they expected,” said Charlie Scharf, head of retail financial services at Chase. “We continue to look for creative and effective ways to help them stay in their homes, whenever possible.

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Loan modification programs have been helping some homeowners avoid foreclosure, but not everyone is getting mortgage relief from the government.  Many homeowners are tired of being turned down for refinancing and the government modifications do offer new opportunities for payment relief.  Nearly half of the 1.3 million homeowners who enrolled in the Obama mortgage relief program have fallen out.  The program is intended to help those at risk of foreclosure by lowering their monthly mortgage payments.

Friday’s report from the Treasury Department suggests the $75 billion government effort is failing to slow the tide of foreclosures in the United States, economists say.  More than 2.3 million homes have been repossessed by lenders since the recession began in December 2007, according to foreclosure listing service RealtyTrac Inc. Economists expect the number of foreclosures to grow well into next year.  “The government program as currently structured is petering out. It is taking in fewer homeowners, more are dropping out and fewer people are ending up in permanent modifications,” said Mark Zandi, chief economist at Moody’s Analytics.  Besides forcing people from their homes, foreclosures and distressed home sales have pushed down on home values and crippled the broader housing industry. They have made it difficult for homebuilders to compete with the depressed prices and discouraged potential sellers from putting their homes on the market.

Obama Mortgage Relief Helps Some Homeowners

Approximately 630,000 people who had tried to get their monthly mortgage payments lowered through the government loan modification program have been cut loose through July, according to the Treasury report. That’s about 48 % of the those who had enrolled since March 2009. And it is up from more than 40 % through June.  Another 421,804, or roughly 32 % of those who started the program, have received permanent loan modifications and are making their payments on time.

RealtyTrac reported that the number of U.S. homes lost to foreclosure surged in July to 92,858 properties, up 9 % from June. The pace of repossessions has been increasing and the nation is now on track to having more than 1 million homes lost to foreclosure by the end of the year. That would eclipse the more than 900,000 homes repossessed in 2009, the firm says.  Lenders have historically taken over about 100,000 homes a year, according to RealtyTrac.

Zandi said the government effort will likely end up helping only about 500,000 homeowners lower their monthly payments on a permanent basis. That’s a small percentage of the number of people who have already lost their homes to foreclosure or distressed sales like short sales – when lenders let homeowners sell for less than they owe on their mortgages.  Zandi predicts another 1.5 million foreclosures or short sales in 2011.  “We still have a lot more foreclosures to come and further home price declines,” Zandi said. He said home prices, which have already fallen 30 % since the peak of the housing boom, would drop by another 5 % by next spring.  Many borrowers have complained that the government program is a bureaucratic nightmare. They say banks often lose their documents and then claim borrowers did not send back the necessary paperwork.

The banking industry said borrowers weren’t sending back their paperwork. They also have accused the Obama administration of initially pressuring them to sign up borrowers without insisting first on proof of their income. When banks later moved to collect the information, many troubled homeowners were disqualified or dropped out.  Obama officials dispute that they pressured banks. They have defended the program, saying lenders are making more significant cuts to borrowers’ monthly payments than before the program was launched. And some of the largest mortgage companies in the program have offered alternative programs to those who fell out.

Homeowners who qualify can receive an interest rate as low as 2 % for five years and a longer repayment period. Those who have successfully navigated the program to reach permanent modifications have seen their monthly payments cut on average by about $500.  Homeowners first receive temporary modifications and those are supposed to become permanent after borrowers make three payments on time and complete all the required paperwork. That includes proof of income and a letter explaining the reason for their troubles. But in practice, the process has taken far longer.  The more than 100 participating mortgage companies get taxpayer incentives to reduce payments. As of mid-June only $490 million had been spent out of a potential $75 billion the government has made available to help stem the wave of foreclosures

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When a real estate professional says a home is under-water, they are referring to mortgage that is greater than the home’s value.  Americans continue to struggle to make their mortgage payments on time and many homeowners have discovered that their property’s value has declined so significantly that their mortgage loans are under-water.

Under-Water Home Mortgages

Zillow published a recent report that indicated that more than 20% of U.S. mortgage loans are currently underwater.  This is one of the reasons why so many banks are extending loan modification plans in such a great volumes.  The mortgage lenders are focused mostly on modifying mortgages for homes in these distressed states.  Besides, very few of borrowers in Arizona, California, Florida and Nevada qualify for fixed rate mortgage refinancing.

Miami-Fort Lauderdale property values saw a year-over-year decline of 15.2%, while values in Phoenix, Arizona, fell by 11.8 %. Despite the high percentage of negative equity, the 2nd quarter rate 21.5% is actually lower than from the 1st quarter figure of underwater home mortgage loan, which was reported at 23.3 %. However, some areas that benefit from both state and federal tax credits have seen home values increase, the report shows. For example, the state of California saw values rise by 27.8 %, marking five consecutive quarterly increases.

Economists continue to examine the devastation that underwater mortgage loans have influenced.  They like this study because it remains a strong indicator of forecasted home foreclosures. In addition to not being able to afford home loan payments, some homeowners who are unable to modify their mortgages are strategically defaulting on their home loans.  This means that they are walking away from their homes and letting the bank repossess their property.  “It is the paramount challenge facing housing markets,” Zillow’s chief economist Stan Humphries told Reuters. “We already have had record levels of foreclosure and, combined with high unemployment, negative equity is very toxic to the market.”

Though fewer Americans are strategically defaulting on their mortgage loans, foreclosure rates continue to increase with RealtyTrac reporting a first-quarter foreclosure rate of 1.65 million. Analysts project that the number of mortgage defaults, repossessions and scheduled auctions are likely to reach 3 million by the end of the year

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Homeowners continue to report struggles with the loan modification process and with so much mortgage relief talk around the nation many consumers want to know what is going on.  According to former executive, Jeff Morris, “Many homeowners simply do not have enough income to justify the lenders extending a loan modification.”  Morris continued, “If a borrower can’t document their income at all, it is very unlikely that the banks and lending companies will approve them for a loan modification.  Morris made it clear that borrowers do not need to be under the 50% Debt to Income Ratio (D.T.I.) like they do to qualify for refinance-mortgages.  He said that D.T.I. from 70 to 95% is pretty common for loan modification agreements this year.

Alarming Numbers on Foreclosure Crisis

More than 1 million homes expected to be taken over by mortgage lenders in 2010, yet thousands of homeowners report relief from the loan modification that they were approved for. Second mortgage lien stripping has also been a common practice for bankruptcy lawyers. Getting approved for a second mortgage modification has become trickier than many borrowers had hoped.  Another problem many borrowers find is that the investors are usually different for their first and second mortgage.  This makes the second mortgage modification process.

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The U.S. government has been working frantically to pass mortgage reform that would require loan modification licensing.  The U.S. Department of Housing and Urban Development, which oversees compliance with the SAFE Act, has proposed that employees handling loan modifications for struggling homeowners also meet the licensing requirements, a policy opposed by banks.  John Courson, CEO of the Mortgage Bankers Association said that mandating licenses for mortgage loan modification advisors could slow hiring and hinder efforts to cut home foreclosures.” Courson continued, “We say this is not originating a new home loan, because the loan terms are being reduced on their home mortgage to increase the affordability and reduce the likelihood of a foreclosure.”

The housing department hasn’t set a deadline for a decision, said Lemar Wooley, a spokesman.  According to Anthony Hsieh, CEO of, an online mortgage originator based in Irvine, California, the process costs $3,000 to $6,000 to train and pay the fees for each new employee to comply with the mortgage-licensing system. “The mortgage reform law is supposed to make sure we kick the bad ones out,” said Hsieh. “It could be the opposite, keeping the good loan officers out.”

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Like California and Arizona, Nevada has been hit by the worst home foreclosure crisis of the last century.  Mortgage relief and Nevada loan modification agreements have been a big topic amongst the mortgage industry, banks and politicians.  The state of Nevada recently passed a law called the mortgage loan modification law.  A loan modification plan gives homeowners a fresh start with an opportunity to pay less than their existing mortgage payment.  Many National mortgage lenders, like BofA, Chase, CitiMortgage and Wells Fargo have agreed to extend mortgage relief and foreclosure prevention assistance in an effort to minimize loan defaults and appease the Obama Administration.  Mortgage loan modification plans have received mixed results so far.  There have been many homeowners who successfully fought off foreclosure, but many banks are reporting re-defaults on the loan modification agreements just 6 months after getting the home loan relief.

The Nevada Supreme Court recently said that the mortgage loan modification law is governed for the lawmakers’ intent. Nevada Supreme Court officials said that the administrative rules are adjusted to make a solution if any problems arise between the homeowner and the lender.  The State further noted that there have already been three changes in rules for administering the mortgage loan modification law from the previous year.  In addition, Ron Titus, director of the Administrative Office of the Courts said, “We have 270 mediators, and the vast majority operate very comfortably within the rules of the program and work very hard to help the parties find common ground and reach a resolution.” Titus further states that the mediators can assure a reliable process and there will be unprejudiced treatment between the lender and the homeowner. 

The mortgage loan modification law only has one sanction and it can only be applied to the lenders. If a particular lender won’t show up for the mediation meeting, he will be given a sanction. This has only occurred once when Clark County District Judge Donald M. Mosley ordered a $50,000 sanction against Flagstar Bank FSB. The lender failed to appear in a hearing and was not able to pass any legal documentations of foreclosure in a particular mediation meeting. This loan modification article was written by Jason Blackmore.

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Borrowers across the nation continue to fall behind on their home loan payments. Many have contacted their mortgage lenders in an effort to renegotiate mortgage rates.  Many borrowers have been offered loan modification agreements and forbearances. Clearly the process of modifying their mortgage has made most homeowners become weary.

What else could you call it when almost 1 in 7 of South and Central Floridians who jumped into the Obama administration’s Making Home Affordable Program in January in hopes of getting a loan modification had dropped out by May?  The borrowers who have dropped out have joined an exodus of more than 215,000 borrowers nationwide in the past five months. They went through the trouble of applying, only to leave with nothing to show for it.

The answer, according to representatives of Chase and Wells Fargo/Wachovia among the largest banks operating in Florida is: Those borrowers did not meet the loan modification qualifications. Many of the mortgage relief prospects were not able to send in the documentation or their loan modification application was not completed correctly.

Using the May report from the Treasury Department, it’s clear that Miami-Fort Lauderdale and Orlando-Kissimmee are the largest metro markets in the nation for loan modifications. The two regions account for 6.8% of all Making Home Affordable loans nationwide, topping Los Angeles 6.4% and New York 6.1%.  Here, even those borrowers who do get a loan modification say the process is too vexing. Even if they comply with all the lender’s rules, borrowers say they get the runaround and often, contradictory answers from one day to the next.  Read the original article online Thousands giving up on home loan modification hopes.

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A few of the major home lenders in the Making Home Affordable Program have begun to work with 2nd lien holders in an effort to modify and restructure their delinquent mortgage.  Clearly the goal is to offer a second mortgage modification program that makes their loan payments more affordable. Successfully achieving a principal reduction or negotiating a second mortgage buyout is possible.   Many borrowers have been unsuccessful working with their second lien holder.  Recently several large second mortgage service companies have announced new mortgage relief initiatives that have become available to help homeowners who are struggling with a second lien.  Many homeowners have been rejected in their attempt for mortgage refinancing solutions are frequently denied because their 2nd mortgages combined loan to value level beyond the threshold allowed for refinancing.

We still recommend that homeowners to talk to their lender and let them know about the a Second Mortgage Modification Program that is available to help distressed homeowners negotiate better second mortgage terms or a buyout. Read the original article > Negotiating Second Mortgage Relief

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The latest Home Affordable Modification Program statistics were announced Monday in a report used to measure the success of federal loan modification programs. The HAMP report indicated that slightly more than 10% of eligible borrowers received a loan modification that became permanent. Yet only one in three homeowners who started in the trial program has been kicked out.  The number of homeowners who have received a permanent federal loan modification rose to 340,459 in May from 295,348 reported in April.  That’s about 11% of 3.2 million HAMP eligible loans.  At the same time, the number of trial loan modification plans continued to fall as borrowers must now provide proof of income prior to any new payment plan. Active trial modifications fell to 467,672 from 637,353 in April. And borrowers who received a mortgage modification under the old rules are now required to prove their income before getting a permanent modification.  An additional 150,000 borrowers who could not prove their income or keep up with the new payments had their modifications canceled in May, bringing the total number of cancellations to 429,696. That’s about 35% of the 1.24 million trial modifications started.

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Mortgage relief was extended from Bank of America, Freddie Mac and Wells Fargo.  These banks agreed to grant borrowers in the Gulf Coast region mortgage relief on their home loan payments because of the gulf crisis. Freddie Mac forbearance policies allow its servicers to suspend a borrower’s loan payments for up to three months or reduce payments for up to six months. Based on the individual circumstances, borrowers can receive a forbearance for up to 12 months.  Senior vice president of default asset management at Freddie Mac said, “We are instructing our servicers to work with borrowers with Freddie Mac-owned mortgages to extend forbearance of mortgage loan payments where appropriate to help them stay in their homes as they navigate through this financial hardship,” said Ingrid Beckles.

BofA is working to develop assistance plans and programs to help its borrowers through the crisis, a spokesperson for BofA said. The bank developed similar loan programs following the hurricanes in 2005 and in other disaster situations in the US. Usually, disasters call for an initial 90-day forbearance of payments for BofA borrowers, and, like Freddie Mac, individuals needing more time will be handled on a case-by-case basis.  BofA is currently analyzing its portfolio of mortgages and loan modifications in the region and assessing the situation to determine what other specific needs may need to be addressed in a disaster assistance program for victims of the Gulf of Mexico oil spill.

According to a statement from Wells Fargo, the bank extended its borrowers affected by the Gulf Coast oil spill a 90-day foreclosure moratorium.  “We encourage customers affected by the Gulf events (loss of job or income) to reach out to us to discuss loan workout possibilities.  They suggest working with their with our home loan consultants on to determine available home refinance and loan modification options for their homeownership and financial needs.”

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Government home loan modification programs are being offered under the HAMP, or Home Affordable Modification Program.  We are told that some borrowers are getting approved for a loan-workout with mortgage rates as low as 2 % for five and even 10 years for qualify homeowners.  Many mortgage lenders are offering 30-year fixed rates at 5% with no points.  No cost mortgage refinancing requires stellar credential though. Both bankers and mortgage counselors agree that if you’re considering home refinancing, do your homework. Check with your current mortgage holder.  We suggest shopping online for the best refinance loan. If you do not qualify then consider a loan modification from an attorney backed loan modification company.

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Thousands of borrowers are losing trial loan modification agreements that were installed recently under the HAMP prrogram. The total of distressed homeowners who drop out of President Obama’s loan modification plan soared in April.  According to federal loan modification statistics released last week, over 122,000 homeowners had their trial mortgage loan modification agreement canceled in April, bringing the total to 277,640 since the HAMP program began about a year ago.

Meanwhile, only 68,000 homeowners were converted from the trial modification phase to a permanent loan modification last month.  Under the program, known as HAMP, eligible troubled borrowers are put into trial home loan modifications to determine whether they can keep up with the reduced mortgage payments and to give loan servicers time to verify income and hardship.  A total of 295,348 people have received permanent long-term help under the loan modification plan, but another 3,744 who were converted to permanent status were later cut from the program anyway.  Mortgage refinancing has not been an option for millions of homeowners who have inadequate credit scores or mortgages that are buried under-water with home values less than the mortgage balance.

The latest modification report does not include home equity loan modification details.  Many industry insiders believe the second mortgage foreclosures and defaults could be stemmed if home equity servicers came up with a good modification plan for home equity credit and second mortgage loans.  Many homeowners have used the loan modification to stop the foreclosure proceedings.

In most cases, loan modification agreements are usually canceled if the borrower fails to make the adjusted payments, or if during the trial period, does not meet the program’s criteria or hand in the required income verification paperwork.  Obama admin officials said they were not surprised to see the number of canceled trial mortgage modifications rise because borrowers had been allowed to enroll in the trial program by simply stating their income. Many homeowners are being dropped from HAMP if they cannot prove the income figures they originally provided.  “As those decisions get made, it’s certainly expected that there would be some that fall out of HAMP,” said Phyllis Caldwell, chief of Treasury’s Homeownership Preservation Office.  So far, some 24.6% of trial loan modification options have become permanent, up from 19.8% a month ago.  Some 637,353 troubled borrowers remain in trial mortgage loan modifications, officials said. The pace of people entering the program has slowed as servicers begin implementing new requirements to collect documents at the outset. Read the original article at

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President Obama made more mortgage news as he announced further expansion of the federal loan modification program, Home Affordable Modification Program also known as HAMP.  Many Washington insiders are questioning the rumored bailouts to mortgage lenders and banks contained in the fine print of the HAMP program.

According to the Wall Street Journal, several of the largest mortgage lenders, including some that have already received huge bailouts, carry hundreds of billions worth of home equity loans on their books. As home prices have nationally declined by almost 30%, these second mortgage liens are worthless in the case of a foreclosure. Second mortgage loans are usually wiped out completely during a foreclosure if the price has decreased more than 20%.

Yet the Obama solution is now to pay off 6 cents on the dollar for those junior liens, also known as second mortgages. While 6 cents doesn’t sound like a lot, it is a whole lot more than zero, which is what the banks would receive otherwise. Given that the largest mortgage lenders are carrying over $500 billion in second mortgages that may need to be written down, we are talking about tens of billions of taxpayer dollars again being funneled to the very banks behind the subprime mortgage crisis.  If that bailout isn’t enough, the new equity loan plan increases payments to home loan lenders to not take over homes, all at the expense of the taxpayer.  Many critics believe that Obama continues these mortgage bailouts rather than correcting the financing problems in the housing market.

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With home foreclosures breaking records every quarter, the Obama administration’s program to attack the housing crisis has been a disappointment mortgage lenders report that they continue to struggle getting the required paperwork, while homeowners and housing counselors say processing the mortgage bottleneck appears to be impossible. The $75 billion program has performed so poorly that some housing advocates say the Obama administration needs to reconsider their entire approach on mortgage relief and loan modifications. Mortgage refinance opportunities continue to narrow so loan workouts may be the last hope to prevent foreclosures for these distressed homeowners.

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Mortgage loan modifications are, for some homeowners, the only hope they have of keeping their home as unemployment and a slow economy still takes its toll.  Big lenders like Bank of America, Wells Fargo, and JP Morgan have the majority of mortgage loans that homeowners are seeking to modify and while the home loan modification numbers for these lenders rose from November to December 2009, many are wondering what will be the story in 2010?  Without home loan modifications, many homeowners’ mortgage loan payment would be too costly as those who, pre-recession, were able to meet payments have seen financial hardships that are causing them to struggle just for the most basic of needs.

However, Bank of America, Wells Fargo, and JP Morgan have done a great many home loan modifications, but there is call for more action and modifications to be moved from a trial phase to a permanent phase. The problems in the program and slowness of the transition in permanent home loan modifications have been traced to both lenders and homeowners.  There are stories from homeowners saying they are ignored and passed over for modifications, while lenders have stories of homeowners not filling out paperwork or following the correct procedure to ensure a permanent loan modification. 

With unemployment the next big issue that must be addressed, big lenders like Bank of America, JP Morgan, and Wells Fargo are in a great position to help homeowners, even if some who are given modifications still fail to make payments down the road.  If multiple modifications are made and even just a handful of homes benefit from the home loan mortgage modification then many people believe it would all have been worth it.  Read the original blog post online

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According to DataQuick. the worst may be over for California’s hard-hit housing markets, The state’s most affordable markets, which represent 25% of the state’s housing stock, accounted for 34.9% of all home foreclosure activity in the fourth quarter, down from 52% a year earlier.  Nevertheless, mortgage loans were still more likely to go into default in inland areas such as Merced, Stanislaus and Riverside counties, which were ravaged by foreclosures during the downturn. The coastal counties of San Francisco, Marin and San Mateo had the least probability of default.  California loan modification agreements continue to flood the loss mitigation departments of banks across the country.

While many of the loans that went into default were originated in early 2007, the median origination month for last quarter’s defaulted home loans was July 2006, the same month as during the prior three quarters. According to DataQuick, the median origination month a year before was June 2006, so the foreclosure process has moved forward through one month of bad loans during the last 12 months.  “Mid-2006 was clearly the worst of the ‘loans gone wild’ period and it’s taking a long time to work through them,” Walsh said. “We’re also watching foreclosure activity start to move into more established mid-level neighborhoods. Homeowners were able to make their payments longer than homeowners in entry-level neighborhoods, but because of the recession and job losses, that’s changing.”  The mortgage lenders that originated the most loans that went into default last quarter were Countrywide with 5,588, Wells Fargo with 3,482 and Washington Mutual with 3,460. Along with Bank of America (1,760 loans) and World Savings (1,869), they were also the most active lenders in the second half of 2006. Last quarter’s default rate on loans originated in the second half of 2006 ranged from 1.5% for Bank of America to 13.1% for World Savings, according to DataQuick.

On mortgage loans from primary residences, California homeowners were a median five months behind on their mortgage payments when lenders filed notice. The borrowers owed a median $13,510 on a median $325,818 mortgage.  On home equity loans and lines of credit in default, borrowers owed a median $3,939 on a median $62,965 credit line. The amount of the credit line that was actually in use can’t be determined from public records.

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Is the mortgage loan modification system helping or hindering the real estate recovery?  A recent article in the New York Times sheds light on the theory that by encouraging homeowners to stay in homes that they cannot really afford, Obama’s Making Home Affordable program is actually increasing the agony of homeowners, who pour money down the trap of their home loan rather than recognizing the loss and starting over.  In the meantime, the mortgage refinance and mortgage modification programs disguise the true state of bank balance sheets because modified mortgage loans are not yet non-performing home loans, and slow down the process of recovery.

But I think that the so far lackluster results from MHA do point to something important, which is that we don’t have the kind of mortgage crisis we thought we had when we passed the modification.  This represents not only a shift in our thinking about how to fix the housing markets, but a major shift in our national narrative about the housing bubble.  Six to nine months ago, the major story we told in connection with the financial crisis was the homeowner suckered–by either fraud or greed–into a teaser loan with an artificially low interest rate that was going to turn disastrous when it reset.

We have seen some of that, to be sure, particularly with the “Option ARM” or “negative amortization” loans on which homeowners weren’t even making the full interest payment.  But that hasn’t turned out to be our biggest problem, largely because we are in a very low interest rate environment right now, so many people saw their rates reset downward rather than up.  Instead, we are plagued by negative home equity.  Most mortgage lenders have begun shutting down access to home equity credit lines because of depreciating home values and unemployment.  Look for a proven loan modification program designed to make your bad credit home loan payment more affordable.

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To most distressed homeowners, loan modifications and mortgage relief opportunities seem to be fading.  HOPE NOW recently announced the launch of a new Web portal that will allow the Department of Housing and Urban Development (HUD)-approved housing counseling agencies the ability to submit completed Home Affordable Modification (HAMP) applications for borrowers at-risk of foreclosure.

According to California loan relief guru, Jeff Morris, “Homeowners need to take a deep breath and reevaluate their mortgage relief options, even if they were recently denied by a loan modification company or mortgage lender, because new opportunities have arisen.”  For borrowers with no equity looking to refinance, they should consider the Home Affordable Refinance Program that enables the refinancing of Fannie Mae and Freddie Mac mortgage liens up to 125%.

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Bank of America has provided mortgage relief through concluded and trial loan modifications to more than 600,000 homeowners since January 2008.” A spokesman for Bank of America said they remain focused on providing loss mitigation solutions to help distressed customers maintain homeownership.”  Loan modification strategies remain in the big picture for companies like B of A, Wells Fargo, Citi and Chase.  The loan modification processing centers at these banks is clearly bottle-necked, so you may need to work with an experienced law firm that specializes in foreclosure prevention solutions.  Many of the California loan modification prgrams have been outsourced to processing centers in Arizona, Nevada and Texas.

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