LOAN MODIFICATIONS

Modifications are like a dirty word in the marketplace. Frustration, chicanery, luring borrowers into default, and crating modifications that are bound to fail so that the banks can get that ever precious foreclosure sale. But there is another side to it, as our guest writer David Abellard points out below.

And while I think the entire mortgage foreclosure thing is a complete sham, it is nonetheless true that homeowners want a a modification far more often than just getting a “free home.” Most of us understand that litigation is about preventing the banks from getting a “free home” — which is to say not just any home, but the home that a family resides in.

Litigation also provides the homeowner with presenting a credible threat, especially if they are after discovery on the money trail. So it is impossible to say how much litigation is necessary to get the best terms, or even if the homeowner SHOULD litigate, because much of that has more to do with personal decisions than the likelihood of success in litigation.

There is also a point I want to make to people who are not sophisticated in finance. An interest rate that is far under market rates IS the equivalent of a principal reduction. If you want to learn more about this, Google “present value” and “future value.” If you stay in the home for the duration of the loan, the impact gets larger and larger. But if you are staying in the home for only a short while then reducing the interest rate won’t do much without an actual principal reduction. As pointed out in prior broadcasts and articles here on livinglies, make sure whoever you are talking to about modification, short-sale or any other settlement is aware of two things:

  1. There are hidden programs throughout the country that provide direct financial assistance to those who want to bring their loan current or who need a reduction in principal. The “expert” you are hiring had better know about them or you might turn down a deal that would otherwise be acceptable.
  2. Get a court order approving the modification as a settlement. Submit an agreed order that expressly refers tot he legal description of the property, the fact that the homeowner is the owner in fee simple absolute — by name — and that the holder of the mortgage and note is identified by name. The order should approve the settlement even if the the settlement agreement is confidential and even if the settlement agreement is not attached to the order.
  3. Snatch and Grab: Many of the banks are still secretly scripting their customer service people to lure you into a default with the promise of a modification, even accepting trial payments, and then foreclosing anyway. The courts are not amused and they are getting banged by this practice — but only where the homeowner brings it up loudly.
  4. People ask me “should I stop paying?” The answer is universally that you don’t want to put yourself in a worse position than the one in which you are already stuck. Voluntary nonpayment is only for those who are pursuing strategies based upon strategic default. If the bank tells you to fall behind by 90 days, don’t believe it — it’s a trap. At best they are trying to steer you into an in house modification where the interest rates and payments are higher than in HAMP, HARP or other programs that do NOT require you to be i default for modification, no matter what anyone tells you.

But modifying the mortgage is a legitimate way of ending your problem as long as you take the necessary steps to protect your title. Thus I am inviting people to write in about modification. David Abellard sketches the modification process below:

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Loan Modification Information

Most homeowners have lost faith in loan modifications. Lenders have been alleged to routinely used the process to trick unsuspected homeowners into agreeing to consent judgment in pending foreclosure cases. The skepticism of some is understandable. However, the foreclosure landscape has shifted a bit in favor of the homeowners. The new Consumer Financial Protection Bureau recently promulgated rules that make loan modification more effective.

Lenders and their servicers could face serious penalty for not complying with the federal regulations that went into effect January 10, 2014. If a loan is modified, the new payment will be based on the household income; which is generally 31% of the household monthly gross income. Loans on a primary residence as well as non-owner residence can be modified.  There are several loan modification programs. The Home Affordable Modification Program (“HAMP”) is a government  program that has been extended until 12/31/15.  If a homeowner does not qualify for HAMP, or the investor doesn’t participate in the HAMP program, banks and servicers also offer internal private modification programs as an alternative.  Loan modifications are primarily designed to create an affordable payment plan for the homeowner based on their current income; it does not create equity by reducing the principle balance of a loan based on current property value.

There are mainly three ways a loan can be modified to create an affordable payment:
1) reduction of interest rate;
2) extension of loan term;
3) waiver or deferment of principle balance.

Regardless of what someone may tell you, applying for a loan modification does not guarantee that you will receive one, nor can anyone guarantee specific results.
Normally, the homeowner will have to complete a trial period which usually last 3 months before the modification becomes final.  Applying for a loan modification under certain circumstances may stop the court from entering a final judgment or selling the property while the modification application is being reviewed.  The application process can be daunting and intimidating. There are some law firms which concentrate on loan modification. They can become a very effective interface between the lender and the borrower and facilitate the process.

David Abellard at The Law Office of Paul A. Krasker, P.A.
Office: 561.328.2268,  or 877-332-1965 ext 194
Email: dabellard@kraskerlaw.com,

 

Florida’s Hardest Hit Fund Becomes Focus for Help to Homeowners

This is the topic for tonight’s Neil Garfield show. Tune in tonight or down load the podcast:

Click in to tune in at The Neil Garfield Show

Or call in at (347) 850-1260, 6pm Thursdays

Tonight’s Show Features Carolyn Trego, Hardest Hit Administrator for the Law Offices of Paul A. Krasker, P.A.

 There are dozens of programs available in many of the states that could help thousands of homeowners. The problem is that nobody is making application to those programs. So I am publicizing facts about those programs in an effort to encourage homeowners and attorneys to do their homework and to make proper application. It is probably a good idea to utilize the services of the law firms that have already started to concentrate on these programs. These firms are willing to cocounsel with other lawyers who have been litigating cases or web clients that might benefit from these programs.

 The following article was written based upon information provided by a member of the staff of the law firm that appears to be doing a very good job of assisting homeowners, accessing all available remedies —  which might include but is not limited to litigation.

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Quite often I run into homeowners who have had a hardship and do not know what help could be available.  Two years ago, the federal government gave an additional $2 billion to the 18 states and the District of Columbia that were hardest hit in the economic downturn.

State of Florida was allocated $1Billion Dollars has a hardship fund available only to Florida homeowners called Florida’s Hardest Hit Fund.    Most of you Floridians have not heard of the Fund – mostly because it is poorly marketed by the State, but it is real and deserves more attention.  I cannot believe others are not screaming this from the rooftops and foreclosure defense attorneys and loan modification companies are not referring all their clients to see if this Fund can solve the deficiency issues (or at least narrow the gap of deficiency).  

The owners are not charged a fee to apply for or to receive the available funds.  Final decisions are usually rendered within 60-90 days.  You can even continue to pursue a long term modification while receiving the funds.

Two types of homeowners are covered: Unemployed and underemployed due to no fault of their own.  The funding is to help pay the mortgage arrearages and to help pay the future mortgage payments of qualified homeowners. 

Florida’s Hardest Hit Fund has in place two programs: UMAP and MLRP.  Homeowners could qualify for one or both programs at the same time.  The homeowners who qualify may receive mortgage assistance for future payments up to 12 months (capped at $24,000), or until the homeowner finds adequate employment to resume paying the mortgage (whichever comes first), with up to $18,000 available to reinstate a delinquent first mortgage prior to payments being made.   That is a total of $42,000 to eligible homeowners at no cost to them and quick turn-around times.  How is it possible that this is not being better advertised and promoted?

Additionally, for a homeowner who is delinquent but is recovering from unemployment/underemployment (who may now have a job) and now can afford their future payments, they can still receive up to $25,000 as a one-time payment toward reinstatement of their delinquent first mortgage balance. 

HHF assistance is paid directly to the loan servicer/lender for those homeowners deemed eligible to participate in the program.  Eligibility depends on 3 things: Household eligibility, Property eligibility, Mortgage eligibility.

While you can apply online directly to the State website.

To further information, you can contact Carolyn Trego at 877-332-1965 and she will be happy to assist you with your questions and needs.  You may also visit the HHF official website at www.FLHardestHitHelp.org to review eligibility criteria and apply. 

When applying; please use Referral Code 70099 when completing your application so that you will be directed to the Law Office of Paul Krasker for further assistance.

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