The FTC remains busy on both the mortgage and loan modification fronts. After filing complaints and shuttering several loan modification shops in an action announced on April 6th, 2009, the FTC has issued a warning on deceptive mortgage advertisements. Deception has played a big role in current mortgage meltdown which probably has homeowners struggling with incomprehensible mortgages wondering why such a warning comes out about two years behind the times.

Still, the information is valuable in educating potential borrowers on how to detect a misleading mortgage advertisement. The essence of the warning covers the information that gets put into the ads as well as the information that gets left out. Typically, the information that the potential borrower sees is designed sell the mortgage using verbiage that conveys beneficial terms that may be short lived or illusory. When referring to rates, terms like “low fixed” and “very low” that are not defined may carry unseen surprises for the borrower. For instance, a “low fixed” or teaser rates may in fact be fixed only for an introductory period lasting as little as thirty days. “Very low” rates may pertain to either a payment rate or an interest rate. For the borrower, a very low interest rate is an advantage but if “very low” translates to a payment that doesn’t cover the monthly interest charges that same borrower may unknowingly be buying in to a negative amortization loan. The surprise comes when that borrower notices that, instead of decreasing each month, the balance on the mortgage keeps going up as the monthly payment shortage is tacked on to the balance. These principle increases don’t go on forever. At some point the loan will recast, meaning higher monthly payments for the borrower as the mortgage changes over to positive amortization. These types of mortgages are commonly listed as hardships when struggling borrowers apply to modify them due to payments that have suddenly gone out of reach.

Then there are the notices that appear to be either issued by the government or the borrower’s current mortgage company. Because loan details are considered to be in the public domain, predatory lenders can legally obtain borrowers’ mortgage information and act like their lender. In either case, it’s to the borrowers’ benefit to contact their current lender to see if the offer is legitimate.

Information omitted from advertisements can be equally dangerous for borrowers. Including the annual percentage rate (APR) in an ad allows for “apples to apples” comparisons between mortgages. When the APR is omitted, it’s usually for a reason. Most of the time the reason for the omission is that the lender doesn’t want an “apples to apples” comparison with other mortgages. Borrowers can avoid surprises by insisting on a payment schedule and terms for the life of the loan. Asking about impound accounts for property taxes and homeowners’ insurance can also help the borrower determine the monthly budget.                  

Most of what the FTC detailed in their warning is common sense thinking. Following the logic that if it’s too good to be true, it probably is, can go a long way toward keeping a borrower out of trouble. If you have questions about your mortgage or offers you have received on it, call The Feldman Law Center at ____-

What is a Loan Modification?  The technical answer is the amendment of the loan to re-amortize or alter the schedule of payments for the remaining balance and/or extend the current term of the loan in order to reduce the monthly payment, the interest rate and/or loan balance allowing the borrower to keep their home.

Today’s Economy – Because of the current economy, many families can no longer afford their homes and are losing them to foreclosure.  The foreclosure rate in many states is reaching record numbers.  The more foreclosures there are, the more downward pressure is put on home values.  When there is a declining real estate market, mortgage lenders lose money.  In many cases they can lose thousands of dollars on each home they have to take back in foreclosure.  When the number of foreclosures is at a record number, it is easy to see why there are many banks going out of business.

The Feds – The Federal Government has made many announcements recently about how they will help homeowners in an effort to slow down the foreclosure rate.  It seems as though the more announcements they make and the more bail out bills they pass, homeowners get more confused.  I receive calls every week from homeowners that are so confused with their options that they think the best option is to just walk away from their home and do nothing.

Options – Foreclosure, Short Sale, or Loan Modification are the main options available to homeowners today that are unable to make their house payments.  Foreclosure and Short Sale will have a dramatically negative impact on a credit score.  A loan modification will not have a negative impact on a credit score.  In addition to being the best option to preserve credit scores, Loan Modifications will help stabilize real estate values.

Mortgage Lenders – Contrary to many beliefs, lenders do not want to take homes back in foreclosure.  They want to work with the homeowner to see if there is a viable option to help them keep their home.  They are willing to reduce interest rates, extend the term of the loan and in many cases forgive any past due payments in order to help the homeowner make their home loan payment fit their current circumstance.

Hardship – The key to a loan modification is having a financial hardship.  Hardships come with many different faces.  There are two different types of financial hardships. One type is a reduction in income. The other type of hardship is an increase in monthly expenses.  It doesn’t matter which type of financial hardship the homeowner may have, both are considered acceptable by most lenders.

Examples – Here are a few examples of a financial hardship:  A homeowner might have a reduction in pay because of a divorce, lay-off, reduction in commission or an illness.  A homeowner who was out of work for any length of time and had to live on charge cards for a while, causing an increase in their monthly payments can also be an acceptable hardship to many lenders.  A homeowner may simply have an adjustable rate mortgage that will be adjusting to a payment they can no longer afford.

Loan Modification or Short Sale – Did you know that less than 10% of homes listed for sale as a short sale are actually sold?  The rest of the homes go to foreclosure.  Even if a homeowner is fortunate enough to sell their home on a short sale, it could have a devastating impact on their credit score.  A Loan Modification does not have the same negative impact on credit scores.   A short sale can cause home values to drop because the home is being sold for less than what is owed to the bank.  When a loan is modified the value of the home is not reduced, only the monthly payment is reduced.  As more people start to modify their loan instead of short selling, home values will begin to stabilize.

The Right Answer- There are many different options available today.  Contact a professional to discuss which option is the best for you.

Mounting personal debts is a big headache, considering that one has to think of paying two different institutions with varying interest rates. A debt consolidation is one course of action to unburden one’s self of this problem. However, can a consolidated personal loan be subjected to loan modification. Unfortunately, this is impossible.

Loan modification applies to mortgage loans like real-property mortgage among others.
Although to be able to manage debts, consolidating personal debts is a good step to take. After consolidation, and with loan modification for a mortgage property, there are only two loans left to manage. A classic example of divide and conquer method.

Getting a loan modification entails extended mortgage period and affordable amortization. And with consolidated debt, this paved a way for a person to have more room to manage personal finances effectively. It’s expected that this freedom should be used wisely lest such problem will recur.

At this point, it is wise to seek advice availing free counseling service of the government’s authorized financial aid agency. Likewise, ask a prospective bank or lending institution for possible debt consolidation. So that with personal loans in order, mortgage issues will be approached clearly when applying for loan modification.

When the times come that capacity to pay improves, it’s possible to ask again another loan modification. This time the purpose is increasing the mortgage amount to be paid. Because by doing so, decreases aggregate interests due to a longer payment period from the first scheme. With this scheme, it allows someone’s chances of getting off from a mortgage earlier.

Attacking personal financial issues like this is a matter of right attitude and trust to financial institutions. Hiding away from them will never help. Your debts are bound to catch up with you sooner or later. You might as well face them and get better perspective on how to solve them.

Although the government isn’t the one bailing-out by giving you free money, but the program emanated from them. It is actually the financial institutions receiving the bail-out to keep afloat in serving the public. So in a sense the government has indirectly bail-out individual debts of the public.

Feldman Law Center – Loan Modification

The Obama admïnïstratïon’s'Makïng Home Affordable’ Program has been ïn the headlïnes sïnce ïts annoüncement ïn earlÿ March. Attendïng to both refïnancïng and Feldman Law Center loan modïfïcatïons, the program gïves strügglïng homeowners fürther optïons as theÿ decïde on the best optïons to lower theïr mortgage oblïgatïons, catch üp on paÿments, and staÿ clear of foreclosüre. The program has also raïsed lots of qüestïons, so these are some of the more freqüent ones beïng asked roünd the ïnternet.

Q ) Whïch banks are provïdïng the program?

A ) The program was ïmplemented fïrst at FNMA and FHLMC and ïs antïcïpated to roll oüt to banks across the natïon over the followïng several months. Banks collaboratïon ïs volüntarÿ ünless theÿ accepted FSA/TARP ( bank rescüe ) fünds. Those banks wïll be necessarÿ to süpplÿ refï’s and Feldman Law center loan modïfïcatïons ünder the program’s süggestïons.

Q ) Is there a restrïctïon on the sïze of the mortgage that can eïther be refïnanced or modïfïed?

A ) A mortgage müst be $797,000 or less to be elïgïble.

Q ) Wïll a loan modïfïcatïon or refïnance hürt mÿ credït score?

A ) Credït worthïness scores ünder the program wïll not be ïnflüenced as the hoüse owner’s mortgage ïs essentïallÿ beïng re-wrïtten. [**] cïrcümstances related to eïther refïnancïng or modïfÿïng coüld have an effect. For ïnstance, mïssed paÿments leadïng to an alteratïon defïnïtelÿ woüld hürt a credït hïstorÿ. On the üpsïde, lower mortgage paÿments coüld gïve a hoüseholder the opportünïtÿ to paÿ down other debts, leadïng to a better credït hïstorÿ over a perïod of tïme.

Q ) Is ït possïble that mÿ mortgage paÿments coüld actüallÿ go üp?

A ) It’s possïble. Hoüse owners stïll ïn the’teaser rate’ segment of theïr mortgage are one groüp that mïght see an ïncrease. The program’s base rate of 2 percent and caps on the proportïon of home loan paÿments to ïncome shoüld lessen the ïncrease. Another groüp of homeowners that maÿ be hïghlÿ lïkelÿ to see a paÿment ïncrease ïs the one wïth negatïve amortïzatïon loans. Re-workïng those mortgages ïnto amortïzïng loans coüld raïse paÿments notïceablÿ. Despïte the potentïal of ïncreased paÿment reqüïrements ünder eïther optïon, ït maÿ stïll make sense to refï or modïfÿ ïf the change ends ïn a’lesser of 2 evïls’ scenarïo where paÿments go üp büt as müch as ïf the homeowner does nothïng. Paÿments can be gaüged at the state’s web sïte at http://www.makïnghomeaffordable.gov

Feldman Law Center – Foreclosure Assistance

Q ) Does the program expïre?

A ) Yes. The Makïng Home affordable program expïres on Jüne ten, 2010, whïch gïves hoüse owners, especïallÿ those mentïoned ïn the sïtüatïons ïn the prevïoüs qüestïon, some tïme to sït on theïr lower paÿment program before adjüstïng üpward.

Q ) Can i do a refïnance or loan modïfïcatïon on mÿ own?

A ) A professïonal ÿes. Eïther can be done as a’do ït ÿoürself’ büt there are a lot of ïssües to consïder. One ïssüe ïs jüst the tïme ïnvolved ïn gettïng the project fïnïshed. Bank’s hoürs of operatïon are tÿpïcallÿ verÿ sïmïlar to those of people workïng a regülar 9 to fïve schedüle. ïf a hoüse owner can’t püt tïme ïn to the project dürïng work hoürs ït’ll need tïme over lünch and after work, ïf that’s possïble at all . A do ït ÿoürselfer shoüld make allowance for lots of tïme to stüdÿ each process, phone/hold tïme wïth the bank, and for paperwork. The second ïssüe ïs a refïnance or Feldman Law Center loan modïfïcatïon ïs stïll a negotïatïon. Hïrïng an attorneÿ to wrïng oüt the best terms possïble coüld make the costs ïnvolved a partïcülarlÿ worthwhïle ïnvestment.

Feldman Law Center

Legal Dïsclaïmer

The ïnfo contaïned hereïn ïs provïded for general ïnformatïon and advertïsïng pürposes onlÿ and ïs not ïntended to conveÿ a legal optïon nor legal help for anÿ actüal case or sïtüatïon. Nothïng ïn thïs artïcle shall create an attorneÿ-clïent relatïonshïp. Nothïng sent to thïs law offïce thrü emaïl shall constïtüte an attorneÿ-clïent relatïonshïp. Nothïng contaïned ïn thïs artïcle shall be constrüed to be a warrantÿ or predïctïon of resült. Prïor resülts are süpplïed for general ïnformatïon üses onlÿ and do not güarantÿ, güarantÿ or forecast a sïmïlar oütcome wïth respect to anÿ fütüre matter. Resülts achïeved depend on ïndïvïdüal cïrcümstances and not everÿbodÿ wïll qüalïfÿ or become süccessfül ïn restrüctürïng theïr mortgage.

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