Maria Said

Archive for the ‘Loan Modification’ Category

I’ve been researching and thinking about my next blog entry for more than 3 weeks now. It’s a problem of so much happening in the news related to pretty much all of us – tax payers and home owners. The government loan modifications aren’t working; the big banks are skirting around their big pay issue; there are still ownership and conveyance issues on home titles; short sales are not helping homeowners out of a tough financial situation because of future Deficiency Judgments; Forensic Loan Audits are a must for anyone considering a short sale, loan modification, bankruptcy or foreclosure; new ways attorneys are able to help the homeowner keep their homes or at least stay in them long term while all legal options are considered; and last but not least, something we’re seeing all over the news this month – Strategic Default.
I will write about all of these subjects in the very near future. Please feel free to leave comments and/or suggestions.

I think it’s obvious that TARP recipients and HAMP participants have not done what was expected to keep homeowners in their homes. In fact, I believe that it has been the banks/lenders willingness to foreclose and accept short sales rather than do principal reduction loan modifications that has caused Florida, Arizona, Nevada and California home values to drop significantly. If a lender is willing to take a 50% bad debt loss via foreclosure or short sale, why not reduce the principal so the homeowner can stay in his home? It’s the same loss but involves no sale of property, no decline in market value and no decline in the property tax base. As an added bonus, homeowners and their families aren’t forced to move! I’ve talked with a CPA and he has confirmed that a bad debt loss is just that – regardless if the bad comes from a short sale, foreclosure or loan modification.

The Home Affordable Modification Program (HAMP or HMP Fannie Mae Announcement 09-05R) allows home loan servicing companies modify home loans to make home ownership more affordable for financially troubled borrowers. This can be achieved by lowering the interest rate as low as 2%; amortize the loan amount up to 40 years; and reducing the principal amount of the loan.

Is anyone getting these modifications?

Bank of American announced that they have modified loans that have saved financially troubled homeowners as much as $823 million or an average savings of $195 per month. On my current Bank of American loan, this would mean an interest rate reduction of less than 1% without changing the loan term or principal amount. Bank of America has received $52.5 BILLION in TARP money but admits to helping taxpayers to the tune of less than $1 billion!

I personally know of only one person who has received a decent loan modification offer. Litton Servicing offered to drop his 9.25% to around 5%. I’ve checked with friends and business colleagues and they don’t know of ANYONE who has been helped.

Please let me hear from you if you are a loan modification success story. I think we’re all ready for some good news!