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21 Apr

Should Sacramento home owners skip payments to get a loan modification?

Author: Alex Amaro / Category: Loan Modification, Mortgage

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Much of the feedback lately is that only those home owners behind on payments can get assistance from their lender.  However, banks are now stating, even if subtly, that going behind on payments may not be a prerequisite for getting a loan modification.  Take for instance the two statments taken from these lenders websites.

  • “If you are current on your mortgage, but have had (or are facing) a change in personal circumstances, such as an uncontrollable reduction in income or increase in payment that will create a financial hardship, and feel you are at risk of losing your home, your next step will be to determine if you may qualify for loan modification.” - Chase
  • “If you think you might fall behind on your payments or have already missed a payment, our specialists will work with you to determine your eligibility for one or more of these potential solutions: refinancing, extending the term of the loan, interest rate reductions, temporarily freezing monthly mortgage payments, extended repayment schedules (or) decreasing the principal balance of the loan.” -Countrywide

The point is simple.  If you can make your payment…make it.  If you cannot make the payment, or feel you will not be able to in the future, then contact your loan servicer as soon as possible.

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16 Apr

Federal Housing Rescue Plan May Help Sacramento Home Owners

Author: Alex Amaro / Category: Loan Modification, Mortgage

Federal Housing Rescue Plan Launches
The Obama Administration’s program to rescue distressed home owners got off the ground this week. The program was announced on Feb. 18, but it took several weeks to put the bureaucracy in place.

Six of the nation’s largest banks signed up to participate, the Treasury Department announced Wednesday. They are JPMorgan Chase, Wells Fargo, Citigroup, GMAC Mortgage, Saxon Mortgage Services, and Select Portfolio Servicing.

Treasury says it is allocating $50 billion to the program. The Department of Housing and Urban Development will provide the rest.

The plan calls for loan servicers to reduce interest rates so a family’s monthly mortgage obligation is no more than 38 percent of its pre-tax income. Loan servicers also can reduce loan balances. After the loans are modified, the government then provides enough money to reduce payments to 31 percent of income.

Participating servicers get $1,000 a year for each modification and another $1,000 a year for three years if the borrower remains current. Servicers get an extra $500 if they do the modifications before the borrower falls behind in his payments—and the borrower gets $1,500. Also, homeowners get $1,000 a year for five years if they remain current on their payments. The money must be used to reduce their principal balances.

Source: CNN, Tami Luhby (04/16/2009)

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