Posts Tagged ‘loan modification attorney’

How A Loan Modification Works-Part 2

Thursday, June 11th, 2009

How A Loan Modification Works
Part 2: In The Three Part Series: The Loan Modification Model

Basically a Loan Modification works well when the lender and the borrower have the same starting place and a similar goal to end up. At We Save Homes, Inc. we have a process known as “reverse engineering” whereby we start with what the borrower can afford on a monthly basis, then our professionals work with the bank utilizing all of the tools:  Interest rate adjustment, loan terms alterations, and principal reductions to achieve a win - win loan modification goal.  

So how does a loan modification work?  Below is a simple step by step process providing the information for each borrow to make an informed decision to either “do your own loan modifications”, or work with a paid consultant, law firm or a government sponsored agency.

Step 1:  Gather all of your information:
“    Hardship letter
“    Budget
“    Mortgage statements
“    Mortgage Notes
“    2 most recent pay stubs WITHIN 30 DAYS
“    2007 Tax Return
“    2008 Tax Return
“    2007 W-2
“    2008 W-2
“    Current Profit and Loss Statement (If Self Employed)
“    12 Months Bank Statements (If Self Employed)
“    Rental Agreement for Investment Properties or Boarders or Renters
“    Assets: 2 most recent Bank Statement
“    Homeowners Insurance
“    Property Taxes
“    Medical Bills/Death Certificate  (if Applicable)
“    Letters from Employers, Doctors, State Agencies, etc.

2:  Call your Bank: Call your bank and discuss with them your situation.  We recommend that you fully disclose your hardship and the reasons why the loan you originally agreed to is no longer working for you and be prepared to justify the reasons why.

3. Follow up with your Bank.  It may take several phone calls to several different representatives.  Be persistent!

4. Submit all of your documents in the format and order that the bank is requesting.  You may need to overnight the documents.

5.  Follow up with your bank again:  Make sure you follow up after sending the documents to make sure that they received your information.  The banks are being inundated right now with loan modification requests.  Your persistence will be key.  At We Save Homes inc.  They arrange meetings with the lender as soon as they have all the information to sit down and go through the documentation, essentially building the case for an effective loan modification.

6.  Do you homework:  You need to be prepared to research the tools that are available for a loan modification and how they can work for you.  Also research what your lender is doing on other loan modifications.  We Save Homes, inc. is aware of what each lender is offering, so the lender knows that they have to give the same modification or better.  If you are completing your own loan modification make sure you know what the lender is willing to offer.

7.   Ask for a loan modification that works for you.  Do not settle for what the bank comes up with.  If you are not prepared to research this area and advocate for yourself to get the best deal, it is well worth it to hire a professional in this field who will make sure you don’t need a new loan modification.  The lender may try to get you to agree to a loan modification that is in “the zone” of being called a modification but does not go far enough to make a difference for your personal situation.

There is a negotiation that takes place.  Make sure you have the skills to negotiate for yourself or that your service provider is well versed in the area to be able to negotiate a newly modified loan that you can afford and one that makes sense for you to continue to own your home.

After you have followed these steps, the loan modification request will be reviewed internally at the bank.  The bank needs to be able to justify the loan modification and so they will look at it in terms of the benefit of keeping you in your home and paying your monthly payments.  We save Homes inc. has discovered a delta between the loan modification amount ie. What is affordable for you and the cost to the bank for foreclosing and finally the cost that these loans are being traded on Wall Street?  This formula achieves the highest and best results for the borrower, the lender and ultimately helps the investor as well.

Your bank will inform you of whether your loan modification was approved.  If it was approved, you will receive a new agreement.  This is not a REFI so you will not have to go through the documents, the appraisals, the title changes etc that you had to go through before.  However, pay attention to the agreement and what you are agreeing to with you newly modified loan.

Follow up!  Follow up!  Follow up!  Your success will depend on your persistence and your knowledge going into the negotiation.  

Visit our website at http://www.wesavehomes.com for a Free Loan Modification Consultation today.

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The Pros and Cons of Hiring a Loan Modification Company

Thursday, June 11th, 2009

The Pros and Cons of hiring a Loan modification company, Working with a Federally Funded Advocacy Program, or the “Do It Yourself” Loan modification approach.

Part three in a three part series:  The Loan Modification Model

By now you know what a loan modification is and how it works.  The third and final section describes the pros and cons of the different approaches available to you the homeowner.

“We Save Homes Inc. leads with education.  We hold free seminars to inform homeowners on all of the options available to them so that they are empowered to make an educated decision.  This is an important time in their family’s life, and if they are struggling to make the payment for their home that is not something we take lightly.” Comments Mike McCarthy, Chief Development Officer of We Save Homes, Inc. (GWRC) “ We have thousands of homeowners whom we have helped significantly, but like doing your own taxes, you can do it yourself, you don’t have to hire a service firm to help you.”

Below is a pros and cons analysis of three ways to accomplish a loan modification:  Do it yourself, using a federally funded advocacy program, or hiring a loan modification firm.

Loan Modification: Do It Yourself

Your success with a loan modification depends greatly on which lender you are working with.  There are pros and cons to this approach:

Pros:

  1. Save money: You may save money by doing your own loan modification.  If you contact the lender yourself, especially if your lender is set up to handle these requests, you may save yourself anywhere from 1,500 – 3,500 in fees charged by loan modification advocacy service firms.
  2. Learn a lot/educate yourself on the process:  You will find that you will learn a lot about how loans work by working through the process on your own.

 

Cons:

  1. You may not get the best deal: In this way, you may actually lose money.  Many banks will alter your interest rate, doing enough to assist you, but not reducing the true struggle.  By working with an expert, you gain all of their experience and expertise.  Most importantly, the professional you are working with will be able to leverage the relationship they have fostered at the bank.
  2. The overwhelming time it takes to accomplish this on your own:  Working with a professional that works with the right contact at the bank weekly if not daily insures that they are leveraging this relationship on your behalf.  It may be better for your situation if a mortgage modification professional is going through several loan modifications at the same time.  That nlender will have a more difficult time telling that professional that they won’t do something for you than telling you as you are unaware of what the bank is doing for everyone else.
  3. Trust factor with the bank: The bank wants to the best job it can do for you, however they have the conflicting goal of also remaining true to their investors.  Can you trust the deal the bank is offering  you?  If you are going it alone, will you have anyone to consult or advice you whether you can get a better deal?  Whenever you are in a negotiation you are at a severe disadvantage when the other party “holds all the cards” while working with a third party representative may cost money, it puts an objective party in between you and the bank and helps keep the bank honest and true in what they can do for you.

 

Consider the case of Rosa Ibarra and Luz Aguirre, borrowers at Countrywide.  IN an effort to save money they did their own loan modification and received a modified interest rate only.  They did not receive any principal reduction, nor were they able to affect their second mortgage with the same lender.  Their mortgage interest rate went from 6% to 5.14% and their monthly payments went from $2400 a month to $2100 a month.  As part of the terms they agreed to with this loan modification, they cannot do another loan modification for 1 year.

Arguably, if they worked with an expert, they may have received a better interest rate, a reduction in principal and a reduction if not forgiveness of their second mortgage.

Fast forward six months, Luz lost her job and now they cannot afford their mortgage payment.  The loan modification they negotiated for themselves did not go far enough and kept them on the brink should they encounter any hardship.  They are left with NO choice now except for a short sale.

Working with a Government Agency:

There are a few not-for-profit agencies that are set up specifically to assist you with loan modification.  The most prominent government agency is the Hope Now Alliance www.hopenow.com.

Pros:

  1. The service is Free
  2. There are a range of services available to you including counseling, negotiating and information.
  3. Their website and their counselors offer a great deal of information:  It is very worthwhile to visit their website and find out how their services can help you.

 

Cons:

  1. Nothing is really free:   This service was set up with taxpayer’s money and the support of servicing banks to the tune of 300 million.  The banks like to refer you to this solution because like doing your own loan mod, you can only get so far and you end up with a solution that is “easy” for the banks to accept.  This can sometimes mean – not the best solution you can get for your situation.
  2. This service seems to help the homeowner who fits a narrow profile.  Again, this may not be the solution that best negotiates on your behalf but rather a wholesale approach whereby the President’s plan and standards outlined by the bank are applied.

 

  1. Slow turn-around times: Demand for this service creates a bottleneck and slows down your results.  As a borrower you will have to stand in line for this service and from early reports your loan modification could take as much as 6 months to complete.

Hiring a Loan Modification Firm:

There are a plethora of Loan Modification firms to choose from.  Many of these firms were formed within the last 6-9 months by the very same loan brokers who got homeowners into these loans in the first place.  There are some great companies that are really helping borrowers, and there are many that will take the homeowners last $3000 and never actually work on their file.

Pros:

  1. The benefit of their knowledge and expertise:  Hiring the right firm is similar to hiring the right firm to do your taxes.  They will plan and negotiate on your behalf with their experience of doing hundreds of modifications and knowing where they can push for more for better results for you.
  2. Leveraging the relationships they have with your lenders:  The right loan mod expert will know be on a first name basis with the right contact at your lender. Besides being able to get to the right person on the first phone call, the agent for the bank on the other side of the line knows this person is aware of what is possible and what is achievable.  There is less grey area – all of that is leveraged on behalf of the borrower to achieve a better result.
  3. Quicker timeframes: When you are paying a lawyer or a loan modification professional the process should go much faster than doing it yourself or working with a government agency.  Sometimes, this is can mean the difference between staying in your home and losing it.
  4. Better results:  At We Save Homes, Inc.  For example, the homeowners are overwhelmed at the results they are able to get on their behalf.  Principal reductions, lower interest rates and more favorable terms are not out of the ordinary.

 

Cons:

  1. It costs approximately $3000.  When it is difficult to make a mortgage payment, it can be difficult to find the money to pay for a loan modification.  Make sure the loan modification company you choose has a track record of success.
  2. Who can you trust?:  This is a tough one as there are many scams out there.  Firms that are taking homeowner’s money, promising positive results and not doing anything with the files.  In some cases the files are sitting there for months while the homeowner thinks there is work being done?  There have been cases of foreclosures when the homeowner was completely unaware that no communication was actually taking place with the bank.

“At We Save Homes, Inc. we make sure that we discuss each individual case with the bank prior to any fees or obligations.  We can have a solid picture for the homeowner up front.  Our portal system allows for complete transparency,” says Ryan Boyajian president for WE save Homes inc. “that way the bank, the legal assistant, the homeowner, everyone is in touch daily on the status of the files.”

Contact us for a Loan Modification Consultation today.

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What Is A Loan Modification

Thursday, June 11th, 2009

The Loan Modification Model: A three-part series on What a Loan Modification is, How a Loan Modification works and Three Ways to do a Loan Modification

First in a series of three: What is a Loan Modification

(Laguna Niguel, CA - April 13, 2009) - We have heard a lot in the news about Loan Modifications:  Why you need one, who you should go to for a loan modification, who you shouldn’t go to for a Loan Modification. It is important to know the mechanics of what a loan modification is and the dynamics of how a loan modification works;”A loan modification in the most basic terminology is the modification of your existing loan.

Hopefully, your negotiated loan modification will work for you long-term taking into consideration your ability to afford your payment as well as the value of the housing market. “Says, Mike McCarthy, CEO of We Save Homes, inc. “There are a number of ways to effectively modify your loan, at We Save Homes Inc. we believe that the more information that the homeowner has the better.  We believe in empowering the homeowner with information.”A Loan Modification is essentially changing the terms of the loan.  The homeowner and the homeowner’s consultants look at the equation from an affordability index.  The most recent affordability index is from the Obama plan at 31%.

For the borrower  who wants to stay in their home - affordability is the key element.The bank has many things to consider in modifying the loan.  The modified loan needs to make economic sense and be a discounted asset instead of a toxic asset on the bank’s balance sheet. There are several investors to whom the bank is accountable. Changing the terms of the loan can be a slippery slope and put the bank in a “Catch 22″ between the homeowner and their investors that they in turn sold the loans too.

Homeowners should be aware of these dynamics and if the homeowner is advocating for themselves they should be prepared to negotiate using the means that would be most effective for their personal situation.A loan can be modified in several ways or a combination of the following:1. Interest rate reduction:  this is perhaps the simplest loan modification tool:  The bank can alter the interest rate and can point to many indicators for doing so, especially the economic climate.  The interest rate can be reduced for a term or it can become a lower adjustable rate than what was originally agreed to.”In qualifying our homeowners we find that 90% of banks should be more than willing to alter the interest rate” Says, Gabe Foster, Sr. Legal Assistant at We Save Homes, Inc. “This has become standard, however, we make sure our clients receive the appropriate interest rate adjustment for their specific affordability situation.

“As we have seen and Sheila Behr is quick to point out, there is a high number of defaults from the first loan modifications because the bank and the borrower did not arrive at the appropriate interest rate reduction for their circumstances.  2. Altering the terms of the loan:  Be prepared to ask your bank to alter the terms of the loan beyond just the interest rate.  Sometimes a more affordable loan can be achieved by changing the length of the loan as well as the type of loan.  For example changing a fixed loan to an adjustable loan.3. Principal Reduction:  This is the dynamic that becomes a bit more dicey for the servicing bank however; most experts agree that without a real principal reduction, the loan modification does not go far enough in solving the problem.

Principal reductions can be achieved through price discovery, through determining the accurate value of the loan.  We Save Homes inc, together with leading economic strategists has produced a white paper called H.A.R.P. (Housing Asset Recovering Program) that structures a solution for homeowners, banks, investors and regulators to arrive on the same page regarding the value of the home, thereby justifying principal reductions and eliminating the moral hazard for those homeowners who are able to stay in their home without a loan modification.

The HARP plan includes a unique mechanism to incentivize servicing banks to reduce principal and still make this form of a loan modification attractive for the investors who plan to hold on to the note until the housing market recovers.  The strategy of a loan modification is key to the success of repairing and recovering the housing market.

About We Save Homes, Inc.:We Save Homes Inc. (BB OTC: GWRC) was founded by a group of Real Estate, Mortgage, Financial and Legal Professionals dedicated to educating and assisting homeowners. It is our vision to empower homeowners with knowledge so they may make more informed decisions and remain in their homes during these tough economic times.  GWRC has successfully created a bi-lingual network of resources that facilitate the loan modification process.

Visit our website at www.wesavehomes.com for a Free Loan Modification Consultation

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