Mortgage Lenders Nationwide

Recent government initiatives to stem the nation’s looming home foreclosures are hampered because banks and other mortgage lenders in many cases have more financial incentive to let homeowners lose their property in  aforeclosure than to work out a loan modification agreement, some economists have concluded.   Policymakers often say it’s a good deal for home loan lenders to cut borrowers a break on mortgage payments to keep them in their homes. But, according to researchers and industry experts, foreclosing can be more profitable.   The problem is that loan modifications is profitable to banks for only one set of distressed borrowers, while home loan lenders are actually dealing with three very different types. Loan modification plans make economic sense for a bank or other lender only if the borrower can’t sustain payments without it yet will be able to keep up with new, more modest terms. A second set are those who are likely to fall behind on their home loan payments again even after receiving a loan workout and are likely to lose their homes one way or another. Mortgage lenders don’t want to help these borrowers because waiting to foreclose can be costly. 

Finally, there are those delinquent borrowers who can somehow, even at great sacrifice, catch up without a modification. Lenders have little financial incentive to help them.   These financial calculations on the part of lenders pose a difficult challenge for President Obama’s ambitious efforts to address the mortgage crisis, which remains at the heart of the country’s economic troubles and continues to upend millions of lives. Senior officials at the Treasury Department and the Department of Housing and Urban Development have summoned industry executives to a meeting Tuesday to discuss how to step up the pace of loan relief. FHA has already added a new mortgage loan modification alternative to the traditional FHA refinance loans, for borrowers whose mortgages are greater than the value of their property.  The administration is seeking to influence lenders’ calculus in part by offering them billions of dollars in incentives to restructure mortgages and home loans. Still, foreclosed homes continue to flood the market, forcing down home prices. That contributed to the unexpectedly large jump in new-home sales in June, reported yesterday by the Commerce Department.   “There has been this policy push to use modifications as the tool of choice,” said Michael Fratantoni, vice president of single-family-home research at the Mortgage Bankers Association. But “there is going to be this narrow slice of borrowers for which modifications is the right answer.” The size of that slice is tough to discern, he said. “The industry and policymakers have been grappling with that.”   The effort to understand the dynamics of the mortgage business comes as the administration is begging lending companies to extend additional mortgage refinancing to help borrowers under its Making Home Affordable plan, which gives lenders subsidies to lower the payments for distressed borrowers. According to RealtyTrac about 200,000 homeowners have received modified loans since the program launched in March, while more than 1.5 million borrowers were subject during the first half of the year to some form of foreclosure filings, from default notices to completed foreclosure sales.

No doubt part of the explanation is that lenders are overwhelmed by the volume of borrowers seeking to modify their mortgages. Rising unemployment and falling home prices have added to the problem.   But a study released last month by the Federal Reserve Bank of Boston was downbeat on the prospects for widespread modifications. The analysis, which looked at the performance of loans in 2007 and 2008, found that lenders lowered the monthly payments of only 3 % of delinquent borrowers, those who had missed at least two payments. Lenders tried to avoid modifying the loans of borrowers who could “self-cure,” or catch up on their payments without help, and those who would fall behind again even after receiving help, the study found.   “If the presence of self-cure risk and re-default risk do make renegotiation less appealing to investors, the number of easily ‘preventable’ foreclosures may be far less than many commentators believe,” the report said.

Nearly a third of the borrowers who miss 2 payments are able to self-cure without help from their home loan lender, according to the Boston Fed study. Separately, Moody’s Economy.com, a research firm, estimated that about a fifth of those who miss three payments will self-cure.

When Adrian Jones fell behind on the mortgage payments for her Dallas home earlier this year, her lender asked her to cut other expenses. Jones said she eliminated movies and coffee breaks. She turned to family members for loans. When that failed to raise enough, she sold her second car.   “It hurt, but it also made sense. The debt was my responsibility,” Jones said.   But six months later, after catching up on the mortgage, Jones is again feeling pinched after her hours as an office assistant at an architecture firm were cut. This time, she’s not sure she can fix the problem herself.   “I am going to try, obviously,” she said. “But it is getting harder and harder.”   Like Jones, those who are most determined to meet their obligations are often unlikely candidates for loan modifications.   “These are the people who will get a second job, borrow from their family to keep up,”

Mortgage lenders also worry that borrowers may re-default even after receiving a home loan modification. This only delays foreclosure, which can be costly to the lender because housing prices are falling throughout the country and the home’s condition may deteriorate if the owner isn’t maintaining it. In some cases, lenders lose twice as much foreclosing on a home as they did two years ago, said Laurie Goodman, senior managing director at Amherst Securities.  

American Home Mortgage Services, based in Texas, was willing to modify Edward Partain’s mortgage on his Tennessee home last April after business at his beauty salon slowed and a divorce stretched his budget. But after months of negotiating with his lender, Partain said he was surprised to learn that it would only lower his payments by $90 a month, instead of the $250 decrease he expected.   “At $250, I would have had a chance, but after they added in late fees and payments, I couldn’t do it,” he said.   Partain soon fell behind on his payments again and went back to American Home Mortgage Services seeking a more affordable payment. Partain said he was told that he was ineligible for another modification because it had been less than a year since his last. A foreclosure sale was scheduled for late July. After American Home Mortgage Services was contacted by The Washington Post about the case, the company said Partain would be considered for the federal foreclosure-prevention program and it delayed the sale by three months. Partain is relieved but anxious about the details. “You want to wait and see what figures they come up with,” he said.   Administration officials have not said publicly how many borrowers they expect to re-default under Obama’s program.   But the experience of a separate program run by the Federal Deposit Insurance Corp. could be instructive. After taking over the failed bank IndyMac last year, the FDIC began modifying troubled mortgages held or serviced by the company. Richard Brown, the FDIC’s chief economist, said the agency expects up to 40 % of those borrowers to re-default.   Even at that rate, he said, the modification program is more profitable than doing nothing. “The idea that 30 to 40 % re-default is a failure to a program is false,” Brown said.

For months, thousands of homeowners have been awaiting Barrack Obama’s new administration because of the promised “Hope” and lengthy discussions regarding foreclosure prevention and mortgage relief.  Of course their have been distressed homeowners who have reported better loan payments, but most are growing frustrated in a long line of borrowers awaiting a loan modification or a foreclosure.  Foreclosure scams and fraudulent loan modification programs have been reported in an alarming fashion.

The new federal program to let people refinance or renegotiate their home loans is expected to help millions of Americans lower monthly payments and avoid foreclosure. So what strings are attached?  Some homeowners have expressed concerns about the impact to their credit report or the tax implications from a short sale or loan modification. Other struggling borrowers who are still paying low teaser mortgage rates might fear their monthly mortgage payment skyrocketing.  Here are some questions and answers on concerns homeowners might have about the Making Home Affordable program.

QUESTION- How will my credit report and score be affected?

ANSWER- According to Norm Magnuson of the Consumer Data Industry Association, a trade group based in Washington.  In most cases, mortgage refinancing does not affect your score since it’s simply a rewritten mortgage, this is especially true of home refinance under a federal program like FHA since one of the terms of eligibility is that homeowners can’t have missed a payment in the past year.  It is still unclear what impact a federal mortgage modification an adjustment to terms of an existing home loan, rather than a new one — will have on credit profiles, however, Magnuson said. Regulators haven’t yet determined how the loan modifications will be reported, if at all.

If you are considering submitting a new application for a loan workout or modification under Making Home Affordable, it means you’ve already missed payments and hurt your credit profile. A loan modification should improve your credit profile in the long-run since the idea is to get you on track for meeting payments.  It might also free up money to pay off other debts.  Credit repair has been increasing in popularity and this may be one of the factors.

QUESTION- Is it possible my payments will be higher?

ANSWER- If you’re still paying a low, introductory rate, it’s possible your monthly mortgage payment will increase slightly under the federal refinancing program. But the idea is to avoid the big interest rate spikes that typically come with variable rate mortgage loan.  After submitting a request for the Making Home Affordable program, your current mortgage lender should give you a “good faith estimate” that includes your new interest rate, mortgage payment and the total cost of the loan. Compare the numbers with your current loan; you might decide that refinancing isn’t an improvement.  You can also check out the payment reduction estimator on the government’s Web site at http://www.makinghomeaffordable.gov.

QUESTION- Should I wait to see if mortgage interest rates come down in a couple of months before applying?

ANSWER- Probably not, since mortgage rates are at historic lows.  Last week, rates on thirty-year mortgage loans inched upward to nearly 4.9%, but that’s still close to the lowest level since the Great Depression.  Ken Inadomi, director of the New York Mortgage Coalition said, “Waiting for mortgage rates to drop further would be irresponsible and could backfire.” Even low intro mortgage rates should not be that much lower than fixed interest rates these days and in some cases, they may even be higher. So it’s probably in your best interest to lock in now to a low rate refinance loan that you can afford.  Remember, the Making Home Affordable program expires on June 10, 2010.

QUESTION- What are the tax implications?

ANSWER- Charges for refinancing a mortgage are tax deductible. The total cost should be evenly divided to be deducted over the life of the mortgage, Inadomi said. Other costs, such as attorney or appraisal fees, are not deductible.You will also have to adjust your mortgage interest deduction if you get a lower interest rate.

QUESTION- Can I try to refinance or renegotiate my mortgage on my own, without going through the program?

ANSWER- Working directly with a lender shouldn’t be a problem if you think you’re not eligible for the federal program. Just beware of getting a third party involved, especially if they ask for an upfront fee.

Chief economist for Moody’s Economy.com, Mark Zandi, estimates that 1.6 million American homeowners will lose their homes this year either in a foreclosure or short sale. Some 1.9 million are projected to lose their homes in 2009.  It is highly unlikely the mortgage banks’ loan modification programs can be as successful as they hope.  For example, IndyMac’s program was launched in late August with the belief that they could modify 40,000 home loans. But in late October, FDIC chief Sheila Bair told a congressional committee that the FDIC had only completed 3,500 loan work outs.  So when considering BofA’s claim that it will help 400,000 Countrywide customers and Chase’s goal of providing mortgage relief to 400,000 borrowers, we must understand that the loss and mitigation departments may not be equipped to fulfill such bold goals.

Still, Bernstein welcomes every effort. “Let a thousand flowers bloom,” he said. “It’s like an experiment and, if we’re smart, we’ll see what plans work and what doesn’t.” Then, the best aspects of the various plans could be applied to as many at-risk mortgages as possible.  But the bottom line is that the bank programs won’t be nearly as effective as any massive foreclosure prevention effort that may yet be implemented by the U.S. government, according to Bernstein.   And there is a possibility that such a program may yet emerge. Congress already enacted its Hope for Homeowners initiative, which will offer borrowers refinance mortgages with loans insured by FHA. Now there is talk of a new $50 billion plan that could bail out as many as 3 million homeowners.  

The demand for Loan Modifications is huge!!! This may be once in a life time industry opportunity.  Aren’t you sick of the many over-night loan mod companies?  It is pretty ridiculous that in a few weeks they are suddenly loss mitigation specialists. Our loan modification processing and legal backline has a 95% success rate since 1999. We seek only highly experienced mortgage lenders and brokers for our affiliate program and we do not charge any fee to your client until we have pre-qualified them
and have contacted their lender to get a green light.

If you’re looking for additional revenue streams because your Loan and Real Estate business is flat, look no further or the biggest opportunity for Mortgage and Real Estate professionals in years. Our Loan Modification Lead Program offers:

“    Fast Pre-Qualification
“    Free Affiliate Consultation
“    Turn Key Operation – Earn Commissions NOW!
“    We handle your client from start to finish
“    We are YOUR back office, NO learning curve

Unlike other loan modification companies, we will not accept your clients case unless we know without any doubt that we can help them, that’s why we have the highest success rate in the industry.  We

We know what you are going through, here’s your opportunity to re-align yourself with the current market. Regardless of your current situation, we can assist you in making money by helping your clients save their home through the use of government and non-government programs that the lender must comply with.

JCR Advertising announces national launch infomercial for loan modification industry.  ‘”CRISIS ON MAIN STREET” is a a 30 minute infomercial produced exclusively for Loan Modification companies.  This 30-minute infomercial features segments that document today’s foreclosure market while presenting the solutions that may be available with a home loan modification.  The infomercial highlights current news clips from Senator Barack Obama, President George W. Bush, Federal Reserve Chairman Ben Bernanke, Senator John McCain, and others, providing creditability to the campaign ‘”CRISIS ON MAIN STREET.” 

“The response has exceeded even our expectations”, says Dave Riemann, Senior VP, JCR Advertising.  “Our 30 minute infomercial, CRISIS ON MAIN STREET, includes our live 24/7 answering service that can process loan applications, a complete turn-key website and more. I don’t know of any other campaign that can be implemented in as little as 7 days that delivers immediate lead volume” For many Loan modification companies, like the Loan Modification Outlet, this infomercial presents another opportunity to reach out to distressed homeowners in an effort to prevent foreclosures.

Loan Modification companies can participate with our CRISIS ON MAIN STREET in their local market, with a 7 day turn-around.  CRISIS ON MAIN STREET is available on major broadcast TV stations, CBS, FOX, ABC, Fox Sports, Telemundo, Univsion, Azteca, plus national cable networks, such as CNBC.

Maryland passed a bill amending the state’s foreclosure law. Under the new law, a written Notice of Intent to Foreclose must be provided to mortgagors or grantors prior to filing an action to foreclose on residential property. An action to foreclose may not be filed until 90 days after default or 45 days after the Notice of Intent to Foreclose is sent to the mortgagor or grantor, whichever is last to occur. A copy of the complaint to foreclose or order to docket must also be personally served to the mortgagor or grantor at least 45 days prior to the foreclosure sale. In addition, the name and license number of both the mortgage lender and the mortgage originator must now be included in all mortgages, deeds of trust, and other instruments securing mortgage loans on residential property.

If the Maryland mortgage lender or bank is exempt from licensing, the mortgage or deed of trust must contain an affidavit to that effect. The bill went into effect on April 3, 2008.  According to Jason Sklar an attorney who works with a Loan Modification Company in Owings Mills, the foreclosure issue is serious and needs to be addressed quickly so homeowners don’t lose their homes.