Jeff Nordstrom AZ Realtor

Save Hundreds Each Month with a Loan Modification

We all want lower house payments and Banks want lower foreclosure rates.  How do we do this? Get yourself a Home Loan Modification.

A loan modification is simply a modification of the existing loan, not a refinance.  Lenders are lowering the interest rate, extending the term, and (on limited cases) a principle reduction.   All mortgages can be modified including 1^st mortgages, 2^nd mortgages, HELOC’s, Rental, Investment, and Commercial properties.  Refinancing requires all the documentation required to obtain a new loan.  We have all been through that, and quite frankly most of us won’t qualify with the new lending guidelines and besides the house probably won’t appraise…

Lenders are just now starting to implement the $75 Billion Obama Plan – “Homeowner Affordability and Stability Plan”.  Participating lenders are receiving cash incentives for each modification.  This plan calls for the modification of the borrower’s primary home’s 1st mortgage and who are in a financial hardship.  Borrowers are being qualified on the basis of 31%HTI (Housing to Income Ratio).  To qualify, the lender can reduce the interest rate or/and extend the term up to 40 years to reach the 31%HTI.   In some cases they can reduce the principle, but are not required.  You will need to prove the ability to pay the modified payment and have a willingness to stay in the home.

You have now decided to do a loan mod.  What next…

Never, and I repeat Never pay someone or business requiring you to pay upfront.  These are possible scams.  Anyone can do a Loan Mod and they do not need to be licensed.  You can do this yourself.  Call your Lender’s Loss Mitigation Department. Do not call the Customer Service Line on your monthly statement, as these people are bill collectors and will not help you.  Explain to them your situation and they will guide you through the process and let you know if you qualify. For more information, please contact your Realtor.

Not everyone will qualify and for some it may just not make long term financial sense.  But most do have the opportunity to save hundreds of dollars each month and continue to support the wonderful communities we live in.

Is The American Dream of Home Ownership Over?

What happened to the recent American Dream?  Oversized houses, Large SUV’s, Disney Vacations and so on…

Our biggest worries now are bill collectors, rising gas and food prices, and job security. 

Has the American dream changed in as little as 2 years??

Many of us are trying to keep a roof over our heads and food on the table.  Anyone who has bought or refinances our homes in the past 6-7 years is upside down in their mortgage as much as 50-60%, which can equal hundreds of thousands of dollars.  Foreclosure notices are mounting rapidly and many expect it will take 2 or more years just to see a leveling off. 

Is there any good news?  Yes!

Struggling homeowners have options. The first is making good with your lender by winning the lottery.

Second option is foreclosure: They can sit around and do nothing, wait for their Notice of Trustee’s Sale to come in the mail and find a new place to live within the next 90 days.  They will have major credit issues moving forward and not be allowed to buy a home again for several years after assuming they clean up their credit.  Since Arizona is a non-recourse state, they will not be responsible for their first mortgage, but the 2^nd or HELOC is considered consumer credit and the lender will be going after them for that.  Be aware that a deed in lieu of foreclosure, mailing in the keys, is treated the same way.

Third option is Loan Modification.  Those who have the desire to stay in their home and have income can contact their lender to work out a modification of their loan to bring down their payments.  The principle remains, but the monthly payments go down typically 5 years.

Finally the fourth option is a Short Sale.  A short sale is simply a sale in which the sales price is less than the amount owed on the home.  Home owners who don’t have the income to modify or desire to stay in their home should consider the Short Sale.  If sold short, the homeowner can walk away with their head held high knowing they did the right thing.  Their credit has been hurt, but will be able to buy again with an FHA Mortgage in 2 years when many think we will see a bottoming of home prices.  They will not be responsible for the 1^st mortgage and will have the opportunity to negotiate the 2^nd or HELOC down to pennies on the dollar.

So what does the future American Dream look like?  I think it is job security, no debt, and happiness.