Warning:

Do not pay up-front fees!

Loan Modification and Short Sale Companies are not authorized to charge up-front fees without an advanced fee agreement approved by the BRE.

 

SDHS does not

charge up-front fees.

 

Loan Modification fee is charged after modification is completed to the client’s approval.

Short Sale fee is paid for by the lender or buyer.

Loan Modification

Basics:

If you want to keep your home, you can document your income, and don’t mind owing possibly more on your loan balance than the property is worth, a loan modification may be right for you.

 

Loan Modification is available to those who can document that their current income is sufficient to modify the loan to terms acceptable to lender. Most loan modifications are interest rate reductions, longer terms, waive fees, place missed payments on ‘back of loan’ and occasionally principle reductions. When principle reductions are allowed, programs require the owners to share future appreciation with that government entity and require IRS verification of current and initially stated income (no ‘liar loans’).

 

To Qualify:

  1. You must have verifiable income
  2. Most government sponsored programs require IRS verification of income (both new and old loan)
  3. All modification programs have strict loan to value guidelines
  4. Borrower usually must agree to share future appreciation with modifying agency.

 

Cost:

- No up front cost to homeowner.

- Homeowner only pays fee AFTER an acceptable modification has been negotiated.

- Fee will depend on how many mortgages must be modified, price of home, and complexity of modification.

- Typical modification cost is one month of your current monthly payment.

 

Details:

Through the various government programs for housing and financial stability like Homeowner Affordability and Stability Plan and Making Home Affordable, guidelines were established to modify the loans for millions of struggling Americans. However, the reality is that these programs have assisted only a small fraction of that number. Many of the programs do not benefit those with second mortgages, and require stated income borrowers to verify by bank statements and tax returns their current income and income they stated at the time of the initial loan are accurate and verified by the IRS.

 

At the website http://makinghomeaffordable.gov, you can see the government programs available. To see if your loan is owned by either Fannie Mae or Freddie Mac, and therefore eligible for this program, go to:

 

Fannie Mae: http://loanlookup.fanniemae.com/loanlookup

Freddie Mac: https://ww3.freddiemac.com/corporate

 

Most of these programs only adjust the interest rate to a certain % of gross income (30-40% depending on lender and program) but limited to a variable % of current market vale. When principle reductions are allowed programs require the owners to share future appreciation with that government entity.

 

Example: FDIC program (no principle reduction allowed in this program.)

31% payment to gross income for the first 5 years

65,000 per year x 31% = 20,150 / 1,679 per month PITI (principle, interest, tax and insurance)

400,000 Maximum Loan based on 4% interest, 40 year term, mortgage insurance not included.

 

 

Find out if you are eligible for a loan modification by filling out the following form.

We will contact you with a written recommendation based on your particular circumstances.

There is no obligation, and the consultation is free.

The more information you can include, the more detailed the recommendation we can provide.

Evaluation Specialists are standing by.

 

Contact Information
First name:  
Last name:  
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Best time to contact you:  
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Property Information
Property Ownership Primary Residence     Investment
Address:  
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Lender # 1  
Loan Balance #1  
Loan Type #1  
Adjustment Date #1  
Refi/Purchase Money #1  
Lender #2  
Loan Balance #2  
Loan Type #2  
Adjustment Date #2  
Refi/Purchase Money #2  
Estimated Current Home Value  
Other Real Estate Owned  
Household Monthly Income  
Financial Hardship  
Other Information
What are you interested in?
Loan Mod    Legal    Short Sale    Foreclosure

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Additional Information Regarding Loan Modifications

 

FACTS

  • A permanent change in the interest rate.
  • Capitalization of delinquent principal, interest, or escrow items.
  • Legal fees and related foreclosure costs for work actually completed and applicable to the current default episode may be capitalized into the modified principal balance. Refer to Mortgagee Letter 2005-30 for allowable attorney fees.
  • Possible extension of loan term.
  • The use of any four of the above items will result in the re-amortization of the loan.
  • Mortgagees may use the Treasury 10-year constant Maturity Rate plus 200 basis points OR the Debenture Interest Rate plus 150 basis points in determining the “new” note interest rate. Although at mortgagee’s discretion, note interest rates may be reduced below market.
  • All or a portion of the PITI arrearage (Principal, Interest, and Escrow Items) may be capitalized to the mortgage balance.
  • When establishing a loan modification, it is acceptable for mortgagees to include all payments due including an additional month.
  • Late fees associated with the current default episode should be waived.
  • No administrative fees for completing the Loan Modification documents can be passed on to the mortgagor.
  • The modified principal balance may exceed the principal balance at origination. The modified principal balance may exceed 100% loan-to-value.
  • Mortgagees may re-amortize the total unpaid amount due over the remaining term of the mortgage, or may extend the term not more than 10 years beyond the original maturity date or 360 months from the due date of the first installment required under the modified mortgage, whichever is less.
  • All Loan Modifications must result in a fixed rate loan.
  • The Loan Modification must fully reinstate the loan.
  • Subsequent defaults are to be treated as a new default. Revised – September 4, 2008

 

ELIGIBILITY

  • Minimum of 12 months elapsed since loan origination date.
  • The mortgagor must be 61 days delinquent (3 full payments due and unpaid) or more.
  • Default due to a verifiable loss of income or increase in living expenses.
  • The Loan Modification mortgage must remain in first lien position.
  • Loan may not be in foreclosure when executed.
  • Owner-occupant, committed to occupying property as primary residence.
  • Mortgagor has stabilized surplus income sufficient to support the Loan Modification mortgage.
  • Does not have another FHA-insured mortgage.

 

PROCEDURES

  1. Mortgagee is required to assess the mortgagor’s financial condition.
  2. Mortgagee is to perform a retroactive escrow analysis at the time the loan modification to ensure that the delinquent payments being capitalized reflect the actual escrow requirements required for those months capitalized.
  3. Mortgagee must verify the property has no adverse physical conditions.
  4. Home repair costs may not be calculated into the Loan Modification.
  5. Mortgagee must comply with State and Federal disclosure laws or notice requirements, including whether recordation is necessary to maintain first lien position requirement.
  6. Loans reinstated using a Loan Modification within the past three (3) years requires written justification prior to a subsequent modification.
  7. Subsequent reason for default cannot be related to the previous reason for default.

 

California Specific Mortgage Law:

 

Code 2923.6 Require Lenders to accept loan modifications in most foreclosure situations.  

Enacted on July 8, 2008

As of mid 2009….  California Civil Code 2923.6 has no teeth, and is a meaningless statute.

http://www.mortgagelawnetwork.com/california-civil-code-29236-does-your-judge-understand-this-new-law/

 

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