Option Arm Mortgages

Posted on September 15, 2009 by Duane

Will it Get Better Before It Gets Worse?

The answer to that question is NO! I hate to be the one to break it to you, but from all market indications that I am studying it will not get any better anytime soon.

There are a couple of very real indications that things have not turned around and one indication is that there is a second wave of loans that are about to adjust and they are going to really have a negative impact on the financial market.

The other indicator is the unemployment rate that no one seemed to notice was and has continued to climb resulting in even more foreclosures in the coming months.

Click on this link to read about how the government failed to recognize this problem.

Option Arm Mortgages

Option Arm Adjustable Rate Mortgages are about to go through major resets, sending federal and state regulators scurrying to withstand a new wave of defaults and foreclosures.

National Foreclosure Prevention Services has had some success modifying Option Arm Mortgages, but there are several problems with these mortgages.

1. Most loan modifications will be a principle and interest payment, where the H/O usually paid the minimum payment – not even the interest only payment.

2. When the loan is modified chances are the payment will be higher than what the H/O is currently paying making it imposable to qualify.

3. And because the H/O was paying the minimum and with the reduction of home values, chances are there is no equity and they owe more on the mortgage then they did when they purchased the home.

Most homeowners in an Option Arm Mortgage will either do a Short Sale or walk away from the house – there is very little up side to the picture. However, we do recommend having a conversation with your lender to see what they are willing to do to help.

Despite positive signs of a housing recovery – increasing home prices and sales in most markets nationwide – foreclosures have been continuing to rise, even before option ARMs become an area of concern.

I was reading a great article in Active Rain published by Jeff Geoghan that reinforces my position regarding loan modifications at The Coming Storm. I give props where props are due…he touched base on loan modifications as well and I know from actively doing them the banks/lenders are under staffed and inadequately prepared to handle this crisis.

Foreclosed Homes for Sale

Posted on June 2, 2009 by Duane

$6 Billion Available For Purchase of Foreclosed Homes

The Obama administration introduced the Neighborhood Stabilization Program (NSP) for the purpose of helping communities that have suffered from foreclosures and abandonment. The program facilitates purchase and redevelopment of foreclosed and abandoned homes and residential properties. The government has allocated nearly $6 billion for the NSP. The $3.92 billion allocated under the Housing and Economic Recovery Act of 2008 will contribute a large part of the NSP

The NSP funding will go to households earning less than 120% of the median income of the local area, with 25% of the money going to families earning less than half the median. . While the program was authorized last year, it has been slow to take off so far.

Neighborhood Stabilization Program

Why is the Neighborhood Stabilization Program good for the economy; because foreclosures in your neighborhood can affect your home value? According to a report from the Center for Responsible Lending, a consumer advocacy group, houses located in neighborhoods of foreclosed homes experience a drop in value. The CRL said that foreclosures are likely to cause 69.5 million nearby homes to suffer price drops, which would average about $7,200 per home this year.

The “Original Note”

Posted on May 28, 2009 by Duane

I was attending a real estate seminar several months ago and I had a chance to introduce myself, explain why I was attending and what I was hoping to accomplish from the seminar. When we broke for lunch I was approached by a gentleman who proceeded to tell me that I should ask the lender to produce the original mortgage note and if they could not then they were unable to foreclose on the property.

National Foreclosure Prevention Service does engage a number of attorneys to help facilitate the loss mitigation process, but we are also mindful of the cost involved in mitigating a loan modification. We realize that our clients are in financial distress and we would like to keep the cost of our services reasonable-having to litigate with a bank to produce the note could be both costly and time consuming.

That is not to say we don’t ask the question, but we would much rather attempt a working relationship with the lender and request a true loan modification that would be amicable to my client and the lender. That being said – most of the notes we have requested have been produced and the rest have either caused delays in our request for a modification or our request was approved before we needed to see the original note (my client makes that final decision).

When we get a new client we always offer a free consultation and we ask the homeowner to discuss their options with their significant other before making a decision. We also encourage them to speak to other companies or organizations to get a feel for the conversation and a feel for the answers to their questions.

National Foreclosure Prevention Service offers a free initial consultation to all homeowners looking for options to foreclosure.

Most if not all of our business is referred to us through our network of mortgage brokers, real estate agents, investors and attorneys so we don’t have that issue-but we still do the free consultation and we still ask them to think about what they want to do and then call us if they want to move forward.

For more information click here on Produce the Note.

Say It Isn’t So

Posted on December 5, 2008 by Duane

More than half of delinquent borrowers who had their mortgages reworked earlier this year to avoid foreclosure were behind on their new loan payments after just six months, a federal regulator said yesterday. John C. Dugan, US Comptroller of the currency, told a housing forum yesterday that data his agency is collecting shows the increase in repeat defaults by homeowners is “remarkably high.”

“Put simply, it shows that over half of the loan modifications seemed not to be working after six months,” Dugan said.

So if you thought Loan Modifications or Short Sales would slow down going into 2009 you might want to reconsider that thought and consider a partnership with National Foreclosure Prevention Services.

National Foreclosure Prevention Services is a full service company specializing in Loss Mitigation and Short Sale Services to the investor, realtor and homeowner. We will do all the paperwork, negotiations and in some cases marketing of the property to insure an amicable resolution that will benefit all involved.

Lender or Servicer… What’s the Difference

Posted on November 5, 2008 by Duane

Lender

The lender or the Investor actually owns the loan and will make the final decision as to your approval or denial of your Loan Modification or Short Sale.

Most homeowners don’t even realize the difference and because a typical loan is sold several times it’s no wonder. Most homeowner’s receive their statement every month and write a check out to the name of the company at the top of the page.

Lenders are often more responsive than servicers since they have the final word or say as to approval or denial of the deal.

We will generally close a loss mitigation or short sale case faster with the lender than we will with the servicer; however there are advantages and techniques that we use to get a quick response from the servicer that most companies are not familiar with and that gives us the advantage over most companies.

For a Free No Obligation Consultation Click Here

Servicer

At the time the loan is originated chances are that it will be sold off to a third party. Without the proper infrastructure, employees and budget most lenders will make their money originating the loan and pay out a small fee to a third party company to service the loan with collection calls, billing and customer service.

It is not uncommon for a third party servicer to service loans from more than one lender. What you may not know is that servicer is required by law to provide full contact information for all lenders upon request and since few homeowners even know to ask it’s not surprising they have never been in contact with their lender.

Also true is the fact that most servicers will initiate the loan modification or short sale by sending out the required documents to be complete by the homeowner. We have these documents on file which gives us the advantage because we send these documents out to the homeowner at the time of our consultation and acceptance of our terms.

Over the years we have found that most homeowners will not even try to negotiate a workout plan with the lender.

My initial thought was that homeowners were in denial and that they were hoping something would change allowing them to avoid facing financial ruin and get out of this nightmare they were in.

Then one day after doing a three-way call with my client and the lender I realized it could also be the fear of intimidation and it’s not the lender who is the problem, it’s the collections department. Once you enter you account number into the system and you are behind in your payment, you are routed to the collections department. These people are ruthless and unless you know what to say and how to say it they will threaten you with foreclosure proceedings.

There is a secret to dealing with the collections department and we have the talent and the skill which has allowed us to master the art of negotiations.

Avoid RI Foreclosures

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