Loan Modification Information

What is a Loan Modification?

A Loan Modification is a permanent change in one or more of the terms of a loan allowing the loan to be reinstated, resulting in a lower payment that the borrower can afford. In most cases a homeowner in need for mortgage help will indeed qualify for a loan modification.

To ensure that you understand what a loan modification will actually do for you, consider the following facts:

• A loan modification is indicated when the original loan that is secured by a residence has terms that make it impossible for the homeowner to continue making the payments, thus risking the loss of the residence.
• Loan modifications are not the same as debt consolidations, refinancing loans or even forbearances. Instead, they are long-term solutions for rising interest rates or other hardships that are threatening to overwhelm the budget of a homeowner.
• Loan modifications stop foreclosure proceedings and instead reinstate the loans as they are being modified.

Why lenders would consider a loan modification:

• All or a portion of the outstanding principal and interest, past due escrow, late fees and even costs may be rolled into the loan modification and thus will not be lost revenue to the lender. Since they are spread over a long period of time, they do not pose a problem to the borrower.
• Modified mortgages may use a step rate approach or an extended term methodology to provide for the repayment of the due and past due funds. The lower payments ensure the repayment by the borrower while, to the lender, the added time is actually money in the bank in terms of yet to be earned interest due.
• Foreclosure is avoided and even though banks routinely foreclose on properties and sell the homes to other buyers for a fraction of a price, the slowing housing market has made it difficult for banks to unload such properties and then recover any additional funds from the previous homeowners. Loan modification is a more fiscally attractive solution for any lender.
• A modified loan protects the credit rating of a borrower and it also helps lenders show less defaulting loans in their portfolio. This of course makes a good impression when the financial institution is wooing potential investors.

Basic requirements for a loan modification:

Your monthly mortgage must be affected by a verifiable reduction in income. It is required that you are currently employed or have another source of stable and predictable monthly income that is provable. The home for which you are seeking to obtain a loan modification must be your primary residence.

Contacting your lender:

If you have fallen behind on your mortgage payments, do not be afraid to call your lender to request a loan modification or other pre-foreclosure options.

Understanding the loan modification:

Loan modification sounds intimidating to the average homeowner but the process is indeed simpler than you might think. We have tried to break it down in simple terms so you can better understand the process. Ultimately, a successful loan modification requires an agreement between the homeowner and the lender on the new terms of the loan causing both parties to become better off after the transaction. Below are what is required for each party.

Three elements must exist to make a homeowner a good candidate for loan modification:

• Desire to Keep the House
• Experienced a Financial Hardship
• Income/Employment - Able to continue making lower payments
• A financial hardship can also include an interest rate increase in an ARM loan. If you have the above 3 elements as part of your situation.

For The Lender/Servicer:

Lenders and mortgage servicers each have their own loss mitigation departments and policies, but what is clear is that no lender wants yet another house to enter foreclosure, specially with all of the recent government incentives and assistance. As such, given foreclosure the alternative, as long as the homeowner can still make payments on the loan, the lender would be willing to work with him/her to prevent a foreclosure. Typically, lenders' requirements are to make sure that the deal makes fiscal sense. For example, they must determine that the revenue lost in lower payments on the loan would still be better than the cost associated with the foreclosure and maintenance of the home after it is given back to the bank. In certain situations, this really gets down to bad vs. worse for the lender, but as a general rule, it is always better to let the homeowner keep his/her home and not take the house back.

Obama's Making Home Affordable Program:

Making Home Affordable is part of President Obama's comprehensive strategy to get the housing market back on track. Through the Making Home Affordable Program, up to 9 million American families may be eligible to refinance or modify their loans to a payment that is affordable now and into the future.

Avoid loan modification scams:

Be very careful if you choose to use a loan modification company that takes a fee up front to negotiate your loan modification for you. They cannot guarantee a successful modification and can end up costing you another month's mortgage payment in exchange for false hope. The best of these companies have done the modification countless times and will actually try to help you in earnest without guarantee. The worst are scams that take your money with a cursory attempt to help you.

Top 10 questions and answers to understand loan modifications:

The loan modification process can be frustrating and confusing for many distressed homeowners. If you are considering contacting your lender about a loan workout to avoid foreclosure, you need to get as much information upfront as possible so you will be prepared and able to present your case in the best possible light. Programs and guidelines are changing and it is getting much easier for homeowners to get the help they need. To help you understand how the process works and what you can expect.

Beverly Shortsale Inc.

Regardless of your circumstances, we have powerful solutions available. Most of our solutions are free to the property owner.

Beverly Shortsale is a professional California short sales and loss mitigation advisory firm assisting many property owners in the intricate business of short sales, modifications, forbearances, deeds in lieu and other loss mitigation solutions.

Beverly Shortsale has helped property owners avoid foreclosure and the stressful act of eviction. With over 30 years of experience our principals developed a far-reaching network of contacts consisting of mortgage companies, banks and realtors. The strength of Nationwide Real Estate Solutions experiences, knowledge and relationships are invaluable.

For a free consultation please call one of our short sale specialists at
1-310-598-1399.

Shortsale Infomation

Special Report: On May 14, 2009 the Obama Administration announced that it will expand housing help to include financial incentives and a streamline short sale process. While details have not been fully released, the intent of these additional options is to provide further help to homeowners who do not qualify for a refinance or loan modification under the Making Home Affordable Program. The short sale and deed in lieu options are covered under the Foreclosure Alternatives Program (FAP).

Facing Foreclosure? Consider a short sale:
If you are one of the many homeowners who have fallen behind on your mortgage payments and you don't see any way to avoid foreclosure, a short sale may offer you the least painful way to resolve the situation. Obviously, the ideal scenario would be that you magically catch up on your mortgage payments and keep your home. But for an increasing number of Americans, that is not a realistic possibility, so it's to your advantage to take an active role. This is what a short sale is all about -- resolving the problem, as opposed to simply hiding from your lender and hoping the issue will go away or, worse, walking away from the property.

What is a short sale?
A short sale is when a lender agrees to accept a mortgage payoff amount less than what is owed in order to facilitate a sale of the home by a financially distressed owner. The lender forgives the remaining balance of the loan.

What's in it for the seller?

Because you are making a good faith effort, the lender may look more favorably on you, and perhaps be willing to help minimize the damage to your credit score. You are also spared the stress and embarrassment of a long drawn-out foreclosure process. That's may allow you to feel more in control and that you have a more direct role in paying off part of the debt. Remember, too, that every short sale is a negotiated agreement between the owner and the lender. In a foreclosure, the lender can always pursue the seller for a deficiency judgment to recoup the difference between what it was owed and what it actually collected. In a short sale you may be able to get the lender to accept the sale as "payment in full without pursuit of any deficiency judgment." The lender might agree to that release in return for the seller showing the home, maintaining it as well as possible and not trashing it on the way out.

The lender's motivation:

Why would your lender let you walk away from the home and forgive the shortfall on your loan? To save time and money. Foreclosures are expensive and time-consuming for lenders. Once the lender realizes that a foreclosure is inevitable, a short sale may seem like the lesser of two evils. Plus, short sales help the lender look good on paper -- the property was never listed as an actual foreclosure, which helps the lender's numbers.

Finding a short sale listing specialist:

Many things can go wrong with a short sale listing, however, an inexperienced agent is probably on top of the list. It is important that you interview and select the right real estate agent for the job. Many agents who think a short sale listing is "normal" real estate is not the right agent for you. The short sale market conditions are constantly changing. You want someone who has short sale experience and has invested in additional training, and certification to handle your short sale property

Beverly Shortsale Inc.

Regardless of your circumstances, we have powerful solutions available. Most of our solutions are free to the property owner.

Beverly Shortsale is a professional California short sales and loss mitigation advisory firm assisting many property owners in the intricate business of short sales, modifications, forbearances, deeds in lieu and other loss mitigation solutions.

Beverly Shortsale has helped property owners avoid foreclosure and the stressful act of eviction. With over 30 years of experience our principals developed a far-reaching network of contacts consisting of mortgage companies, banks and realtors. The strength of Nationwide Real Estate Solutions experiences, knowledge and relationships are invaluable.

For a free consultation please call one of our short sale specialists at
1-310-598-1399.

Shortsale

5 Ways to Stop the Foreclosure Process

If you have missed more than three mortgage payments, or your lender has filed a Notice of Default (NOD), you might think the loss of your home is inevitable. Even at this stage, there are five strategies you can use to stop the foreclosure process.

• Foreclosure Workout. Up until the time your home is scheduled for auction, most lenders would rather work out a compromise that would allow you to get back on track with your mortgage than take your home in a foreclosure.
• Short Sale. After your lender files an NOD but before they schedule an auction, if you get an offer from a buyer, you lender must consider it. If they foreclose on your home, the lender is going to simply turn around and try to resell it; if you present them with a reasonable short sale offer, they may see it as saving them the time, effort and trouble of finding a qualified buyer in a soft market. So, if your home is on the market, continue to aggressively seek a buyer for it, even after your lender initiates the foreclosure process. Read our guide "How to Sell Your Home Immediately When Foreclosure Looms" for action steps you can take to unload your home fast, then make your best pitch as to why your lender should agree to the short sale.
• Bankruptcy. Bankruptcy stops foreclosure dead in its tracks. Once you file a bankruptcy petition, federal law prohibits any debt collectors, including your mortgage lender, from continuing collection activities. Foreclosure is considered a collection activity, and so the day your lender becomes aware that you have filed for bankruptcy, the foreclosure process will effectively be frozen. But here's the rub; once you get to court, the bankruptcy trustee's role is simply to play referee or mediator between you and your creditors. Bankruptcy really just buys you more time to replace your lost job or recover financially from a temporary disability; it doesn't let you off the hook for your debts. The law requires your mortgage company and other creditors to work in good faith with you to formulate a reasonable repayment plan so you can get back on track. Consult with a bankruptcy attorney regarding whether filing for bankruptcy is a good strategy for you.
• Deed in Lieu. A deed in lieu of foreclosure is exactly what it sounds like. The homeowner facing foreclosure signs the deed to the home back over to the bank -- voluntarily. This sounds like it would be a great option, but actually has the same impact on a homeowner's credit that foreclosure does. Lenders are very reluctant to agree to take a home back through a deed in lieu of foreclosure for a number of reasons: They fear the homeowner will sue later alleging they didn't understand what was happening, the lender must pay any second or third mortgages or home equity lines of credit (HELOCs) off before executing a deed in lieu, and the lender wants to be certain that the borrower's financial distress is real. Allowing the foreclosure process to proceed is one way the lender can be sure the borrower is not faking poverty.
• As such, a deed in lieu of foreclosure is virtually never granted unless: foreclosure is imminent; the owner has had their home on the market for several months and been unable to sell it; there are few or no junior loans or liens the lender will have to pay off; the seller can document their financial hardship; and the seller initiates the process and documents the voluntary nature of their request for a deed in lieu. Even when all these factors are present, many lenders will not agree to a deed in lieu, but it is worth a try!
• Assumption/Lease-Option. Most loans these days are no longer assumable. The average mortgage now contains a "due on sale" clause by which the borrower agrees to pay the loan off entirely if and when they transfer the property. However, if you are facing foreclosure, you might be able to persuade your lender to modify your loan, delete this clause and allow another buyer to assume your loan. The lender may want to assess the new buyer's qualifications, but it can be a win-win-win option for all. You might be able to negotiate a down payment from the buyer which you can use to pay off your outstanding past due mortgage balance.

In a lease-option scenario, the buyer becomes your tenant, and you continue owning the property until the buyer has saved enough down payment money, improved their credit sufficiently or sold their other home. In some situations, the buyer will make a one-time, lump option payment upfront, paying you to obtain the option to purchase your home. You can apply the option payment to bringing your mortgage current. Then, the buyer will make lease payments monthly which you, the seller, then apply to your mortgage. To successfully use a lease-option to stop the foreclosure process, you must negotiate lease payments that cover most or all of your mortgage payment, property tax and insurance obligations -- enough that you can make up any difference and still pay to live somewhere else.

Beverly Shortsale Inc.

Regardless of your circumstances, we have powerful solutions available. Most of our solutions are free to the property owner.

Beverly Shortsale is a professional California short sales and loss mitigation advisory firm assisting many property owners in the intricate business of short sales, modifications, forbearances, deeds in lieu and other loss mitigation solutions.

Beverly Shortsale has helped property owners avoid foreclosure and the stressful act of eviction. With over 30 years of experience our principals developed a far-reaching network of contacts consisting of mortgage companies, banks and realtors. The strength of Nationwide Real Estate Solutions experiences, knowledge and relationships are invaluable.

For a free consultation please call one of our short sale specialists at
1-310-598-1399.

7 Steps to Avoid Foreclosure - Beverly Shortsale

7 Steps to Avoid Foreclosure

If you have missed fewer than three mortgage payments or are anticipating that you might have to miss them in a month or so because of life circumstances, put your smarts in action and implement this simple plan to avoid foreclosure. Don't confuse simple with easy; avoiding foreclosure can take time, patience, money and effort, but if you save your home, it could be worth it!


If you have missed more than three mortgage payments and/or your lender has instituted formal foreclosure proceedings, all is not lost. Check out "5 Ways You Can Stop the Foreclosure Process" to find out how you might be able to save your home. Email your request to info@BeverlyShortsale.com or call (310) 598-1399


Step One: Cultivate Clarity

Before you make the massive commitment of time, money and energy it might take to avoid foreclosure, make sure that saving your home is going to be worth it. If, for instance, you have extra mortgages and home equity lines of credit (HELOCs) on your home, it may not make sense for you to restructure that debt so that you still have a $500,000 mortgage on a home that is worth $300,000.


Step Two: Conquer the Fear

For many people, the prospect of being unable to make their mortgage payment paralyzes them with fear and anxiety. They stop opening the mail, start avoiding phone calls and procrastinate on paying the bills. The fastest way to feel relief if you are falling behind on your mortgage is to do something about it. Whether you gather your bill statements, apply for a new job or call your lender to explain your situation, moving into action will prevent you from waking up to find a Notice of Trustee Sale posted on your front door. By the time that happens, there is not much you can do to save your home.


Step Three: Increase Your Cash Flow

This may seem like a no-brainer, but it is sound advice. Consider doing some freelance work, getting a second job or taking in a roommate. Evaluate what you don't use and don't need; you wouldn't believe the numbers of people who have spare automobiles, computers and other valuables they can sell. Slash unnecessary expenses; cable TV, massages and dining out must go. Cutting expenses will show your lender you are willing to make sacrifices, boosting the chances they will work out a compromise with you.


Step Four: Call Your Lender to Try to Work It Out

If you make a thorough, persuasive and specific request for a temporary or permanent loan modification, your lender might agree to help you. For more details see "How to Deal With Your Lender When Facing Foreclosure."


Step Five: Try to Refinance

If your mortgage balance is near or less than what your home is worth on today's market, you might be able to refinance your home, get a lower interest rate, lower your monthly payment, skip a payment or two, or even receive some cash at the time you close the refinance transaction. Work with a reputable mortgage broker and try contacting a mortgage representative at your current lender; some lenders will do more to get you into a new loan with them than they will to modify your current loan.

Some nonprofit, alternative and governmental lenders now offer to refinance mortgages of homeowners in distress. For example, the Neighborhood Assistance Corporation of America offers a Home Save refinance mortgage with interest rates far below market averages. The Federal Housing Administration (FHA) has also set aside billions for the purpose of refinancing the loans of borrowers who have fallen behind on their mortgages.


Step Six: Put Your Home on the Market Immediately

If it looks like you will not be able to work out a solution with your lender or refinance your home, you should put it up for sale -- immediately. Find a real estate agent who has successfully represented other homeowners you know and who has a track record of getting homes sold quickly. The faster you get your home sold, the less damage will be done to your credit and your psyche! See "How to Get Your Home Sold Immediately When Foreclosure Looms."


Step Seven: Bonus Step for Seniors

If you are over 62, you might have additional options. Consider reverse mortgages and advances on your future appreciation, which unlock the equity in your home. These programs all have serious implications, so consult your children, your financial adviser, your CPA and your estate planner before you agree to anything.


We can help you avoid foreclosure.

Call Beverly Shortsale at (310) 598-1399 for more information today!

http://www.BeverlyShortsale.com

Loan Modifications for "almost" everyone!

Loan Modifications for "almost" everyone!

NO appraisal......NO title.......NO escrow.......no kidding! Have your loan recast with the possibility of a lower interest rate and/or principle reduction without all the extra fees and point costs of a refinance. With the current state of the real estate market, lenders are more than willing than ever to work with you if you are behind on mortgage payments or are experiencing financial hardship for many different reasons to adjust the interest rate, lower principle, recast loan amount, give you more manageable payments and/or clear up arrearages. Also unlike a refinance your DTI can be high, there's no employment seasoning, doesn't matter if property has recently been on the MLS or even currently listed, credit scores under 550 exceptable, non traditional income is not a problem, LTV's over 100%, bankruptcy's ok, if the property is already in foreclosure and the NOD has been served its fine, property can be in probate...no problem and all the other things that were typically red flags to lenders do not apply with loan modifications. The main thing the lender will take into consideration is that there is not alot of equity left in the property and their cannot be alot of monthly cash flow available or a huge cash deficit either. Before you foreclose give loan modification a chance. It may give you just the relief you need.

Beverly Shortsale Inc. - Beverly Hills Office
8484 Wilshire Blvd Suite 220 Boulevard
Beverly Hills, CA 91202
P: (310) 598-1399
F: (818) 688-8045

Loan modification hardship letter

Loan modification hardship letter

When getting help to modify your mortgage note you will be asked for certain documents to be used in presenting your case to the lender. One of those documents, and probably the most important, is the hardship letter. This letter basically tells the lender why it is you need them to adjust your mortgage. Its important that it covers all the details but that it remains one page or less. It needs to document all of your current lifes issues so the lender can decide if giving you the loan workout will indeed help the situation and give you the relief you need. Make it unique to your situation and be sure to include all the details of the events. Be sure to include dates and dollar amounts where applicable. An example of hardships that a lender would consider in doing a loan modification or workout are: adjustable rate mortgage reset--payment shock, illness, loss of job, reduced income, failed business, job relocation, death of spouse or co-borrower, incarceration, divorce, marital separation, military duty, medical bills and damage to property (natural & un-natural). This is a list of the most popular reasons that lenders allow loan modifications but other situations will be reviewed for acceptability. Remember, your hardship letter is only one piece of the workout process but is key in getting your loan modification.

Call us today most people that do it themselves end up harming themselves and making the situation worst call and we can help.

Beverly Shortsale Inc. - Beverly Hills Office
8484 Wilshire Blvd Suite 220 Boulevard
Beverly Hills, CA 91202
P: (310) 598-1399
F: (818) 688-8045

Loan Modification Example

Loan Modification Example

Here is an example of a loan modification workout. This was a situation where the home was already in foreclosure. The were in default in the amount of about 19,000 dollars. Their rate had adjusted up to 9.5% which made it difficult for then to make the payments. In this example of a loan modification workout we were able to get the rate down to 5.4% fixed which lowered the payment by 800 dollars a month. The foreclosure was stopped and all back payments owed were added back into the loan amount so the owners did not have to worry about coming up with the 19,000 dollars to catch up. As a matter of fact the only fee they ended up paying was the 500 dollar escrow fee and the cost of the successful loan modification which saved them thousands of dollars a year.

Beverly Shortsale Inc. - Beverly Hills Office
8484 Wilshire Blvd Suite 220 Boulevard
Beverly Hills, CA 91202
P: (310) 598-1399
F: (818) 688-8045

Loan Modification and Bankruptcy

Loan Modification and Bankruptcy

The effects of a bankruptcy on your client’s credit report can be devastating. The average decrease in FICO score from a bankruptcy that your clients can expect is 100 points. Your clients should have their credit pulled immediately after a bankruptcy to verify the accuracy of the items that should be reported on their credit report as included in the bankruptcy. This is crucial to rebuilding your client’s credit after a bankruptcy. Typically if a client is in bankruptcy a lender will not do a loan modification at that time. It will be necessary to wait until the bankruptcy has been finished and then there is a much better chance of doing a loan modification. Keep in mind that loan modifications and short sales will still effect the credit score but not to the extent that a foreclosure will. It may be necessary to see a credit repair specialist after the fact when using one of the processes above. One that I refer my clients to is www.expresscreditrepair.org. They are definitely the rolls royce of the credit repair industry and are very good at getting your fico score raised quickly.

Loan Modifications Made Simple

Loan Modifications Made Simple

It has been said that 99% of all “A” type lenders and roughly 70% of sub-prime lenders will negotiate a loan modification where most of the arrearages and pre-foreclosure fees are either wiped out or rolled into the new recast loan amount. Payments can remain approximately the same or in alot of cases (especially where the rate is drastically lowered) will be quite a bit less. In most cases the interest rate will be reduced permanently. This is important because alot of the time it is the only way the owner will be able to stay in the home long term.

Our job is to convince the current lender that it is better to lower the homeowner’s payment by lowering the interest rate or current loan amount by creating a payment plan the borrower can afford, than it would be to take the home back thru a foreclosure and lose money on the resale. Keep in mind that lenders typically lose money on bank owned properties as they will sell for less than market value, and a commission must be paid to a Realtor, plus closing costs and the cost ofholding the property while they wait for a sale in a market that is depreciating.

Loan modification service companies must prove to the lender the maximum payment a borrower can afford by constructing a financial plan for the homeowner for approval. Also as the homeowner is often late with their payments and in foreclosure or soon to be in foreclosure, we need to ask the lender to forgive the delinquent payments or put them on the back of the loan. Contact us today to do a free analysis.

Beverly Shortsale Inc. - Beverly Hills Office
8484 Wilshire Blvd Suite 220 Boulevard
Beverly Hills, CA 91202
P: (310) 598-1399
F: (818) 688-8045

Saving You Home With A Shortsale or Loan Modification

In real estate, a short sale is a sale of real estate in which the proceeds from the sale fall short of the balance owed on a loan secured by the property sold.^[1] In a short sale, the bank or mortgage lender agrees to discount a loan balance due to an economic or financial hardship on the part of the mortgagor. This negotiation is all done through communication with a bank's loss mitigation or workout department. The home owner/debtor sells the mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds of the sale to the lender, sometimes (but not always) in full satisfaction of the debt. In such instances, the lender would have the right to approve or disapprove of a proposed sale. Extenuating circumstances influence whether or not banks will discount a loan balance. These circumstances are usually related to the current real estate market and the borrower's financial situation.

A short sale typically is executed to prevent a home foreclosure, but the decision to proceed with a short sale is predicated on the most economic way for the bank to recover the amount owed on the property. Often a bank will allow a short sale if they believe that it will result in a smaller financial loss than foreclosing as there are carrying costs that are associated with a foreclosure. A bank will typically determine the amount of equity (or lack of), by determining the probable selling price from a Broker Price Opinion BPO or through a valuation of an appraisal. For the home owner, advantages include avoidance of a foreclosure on their credit history and partial control of the monetary deficiency. A short sale is typically faster and less expensive than a foreclosure. In short, a short sale is nothing more than negotiating with lien holders a payoff for less than what they are owed, or rather a sale of a debt, generally on a piece of real estate, short of the full debt amount. It does not extinguish the remaining balance unless settlement is clearly indicated on the acceptance of offer.

Short sales are common in standard business transactions in recognition that creditors are not doing debtors a favor but, rather, engaging in a business transaction when extending credit. When it makes no business sense or is economically not feasible to retain an asset, businesses default on their loans (called bonds). It is not uncommon for business bonds to trade on the after-market for a small fraction of their face value in realization of the likelihood of these future defaults. Beverly Shortsale Inc can save your home with a Shortsale or a Loan Modification call us today for a free consultation

Beverly Shortsale Inc. - Beverly Hills Office
8484 Wilshire Blvd Suite 220 Boulevard
Beverly Hills, CA 91202
P: (310) 598-1399
F: (818) 688-8045