What to know before you take out a mortgage loan

You need to take out a mortgage loan if you don’t have the required cash to purchase a property. It is advisable that you know about mortgage terms and basic concepts of a home loan before you take out one. It will help you to choose a home loan that suits you the best in the long run. Read on to gather knowledge about mortgage basics.

How to obtain a mortgage
You can take out a mortgage loan from banks, mortgage companies, credit unions and portfolio lenders. You can also complete an online form and provide the necessary documents in order to apply for a mortgage.

Types of mortgage loans
There are mainly 2 types of mortgage loans, which are given below.

ARM (Adjustable Rate Mortgage) – It is a type of home loan with variable rate of interest. The interest rate remains fixed for a certain period after which it changes periodically.

FRM (Fixed Rate Mortgage) – In this type of mortgage loan, the interest rate remains fixed throughout the loan term.

Required documents
You need to provide certain documents to obtain a home loan. They are paystubs for the past 2 years, the borrower’s Social Security Number, income and address proofs along with the recent statements of deposit amounts, stocks and bonds.

Importance of credit repair
Apart from getting acquainted with various mortgage terms, it is quite important to check your credit score before you apply for a mortgage loan. If required, repair your bad credit record before applying for a home loan. You can get better interest rate on your home loan if you have a good score.

You can take help of online forums if you want to know about specific mortgage terms. You can post your query in order to get the answers from experienced professionals. It is advisable that your resolve all your queries before taking out a home loan. It will help you to choose the best mortgage.

Home Loan Modifications: How Do You Qualify?

If you’re one of the many homeowners hit by the economic crash, chances are you’ve looked into refinancing, short sales, and other ways to help you get back on track. But if you’re in serious default or are at risk of losing your home, your best bet may be a home loan modification. Also called a mortgage modification, this process involves negotiating with your lender for more comfortable mortgage terms. The government has launched a home loan modification plan, known as Home Affordable Modification Program, designed to help troubled homeowners get better terms.

Each lender has a different standard for granting loan modifications, but the general requirements are pretty much the same. Below are some common cases that may make you eligible for a home loan modification.

Financial hardship
Maybe you lost your job, got divorced, or had to pay emergency medical bills. These are all valid reasons (especially in this economy) for falling behind on your mortgage. Note that to qualify for a loan modification, the hardship has to be temporary and you have to have sufficient income. Provide bank statements or financial documents to show that you’ll be able to keep up with the modified loan.

Adjustable-rate mortgages
A lot of today’s home defaults can be attributed to adjustable-rate mortgages, most of which were issued during the sub-prime boom between 2004 and 2007. Once the teaser period ended and the rates reverted to normal, many homeowners found themselves unable to keep up. The government’s home loan modification program allows these homeowners to return to comfortable mortgage terms, so they can avoid foreclosure and save their credit.

Falling home values
Many people have found themselves unable to refinance because their home values have fallen, sometimes to a point where they owe more on the home than it’s currently worth. However, decreased home value alone won’t qualify you for a home loan modification, as home values are expected to rise and fall during the life of the loan. But combined with other factors, a decreased value can certainly increase your chances.

Lending violations
Sub-prime lenders have been found to violate a number of laws on fair lending, and you can use this to your advantage when applying for a home loan modification. Have a qualified loan modification attorney review your case and see if there are any violations you can use for leverage. With an experienced lawyer, you can negotiate more strongly with your lender and come out with a much more agreeable deal.

How to Avoid Home Loan Modification Scams?

Home loan modification is easily one of the best ways to save one's home and avoid foreclosure. But as more and more homeowners fall into default, more and more scams have also turned up. And when you’re on the verge of losing your home, the last thing you want is some fake firm who tricks you out of your money. That's why it's important to stay on guard, watch out for suspicious business, and work only with experienced professionals. This guide offers a few tips on avoiding home loan modification scams and finding the right people to help you out.

Look them up.
The Better Business Bureau (BBB) provides a list of legitimate companies and their ratings, whether or not they are signed up. If you're dealing with a loan modification attorney, the Bar Association can also be a good resource. Ask for client references and make a few calls to see what previous clients think of the company.

Don't pay upfront fees.
Upfront fees are the first sign of a loan modification scam. Some companies have been known to charge upwards of $7,000 upon initial consultation, before reviewing your file and without a guarantee of even starting the process. Don't be fooled by companies that try to "scare" you into paying up immediately.

Know their process.
At the outset, ask how the company handles loan modifications. The home loan modification process varies from case to case, and a good loan modification attorney will have a backup plan for every possibility. Find out what they normally do if the lender takes too long to respond, if the request is rejected, or if the first offer isn't good enough.

Make face-to-face contact.
The Internet has made it all too easy for scammers to reach potential victims. While you can find a good loan modification attorney online, it's still important to pay them a visit and make sure it’s a legitimate company. Don’t settle for an online or phone consultation; you need proof that you’re dealing with real professionals who know what they're doing.

Watch out for exact goals.
If a company promises to reduce your rate by a certain amount, chances are it's a scam. Again, home loan modification doesn't work the same way for everyone, so it doesn't make sense to set a single goal for every client. A good loan modification attorney will start by reviewing your case, and give you an estimate based on your situation.

Home Loan Loss Mitigation - Steps to get the best deal !

Loss mitigation has become a big business in recent years, as homeowners fight to keep their homes and lenders struggle to help troubled borrowers. But not all lenders work the same way, and not all loans face the same problems. Sometimes, two homeowners in identical situations can get vastly different loan loss mitigation offers, even from the same lender. That’s why it’s important to get to know your situation and take your time to make sure you get the best deal.

Work with professionals
The first and probably most important thing is to get help where you need it. While it’s technically possible to work things out on your own, working with a loss mitigation specialist makes it infinitely easier—and also increases your chances of getting a good deal. Look for specialists who have worked in your area for a long time—they’ll know better how to deal with local lenders and how the local mortgage market works.

Set realistic goals
Many people go into loss mitigation not really knowing what they’re after. Do you want your interest rates lowered, your terms changed, or part of your balance due written off? Is your lender likely to approve your offer? Often, there’s a difference between the results you want and what your lender is likely to agree to. Talk to your loss mitigation attorney and get sound advice on what makes a realistic goal for someone in your situation.

Know your methods
Loss mitigation takes on a vast number of forms; some of the most popular these days are short sales and loan modification. Each method suits a different type of homeowner, and it’s up to you to decide on the best course. Before taking any steps, ask around to see if you even qualify for the program you’re going after. Again, working with a professional can go a long way in helping you find the right kind of loss mitigation help.

Follow the rules
Once your application is under way, things are pretty much at the hands of your lender. But there are things you can do to tilt the odds in your favor and increase your chances of getting approved. For one thing, be punctual with your replies—if they request additional documents, don’t wait until the deadline to send it in. Showing that you’re willing to cooperate (it’s your loan and your home, after all) tells them that you’re easy to work with and are more likely to stay on track once you get the help you need.

Can a Loan Modification Specialist speed up your Loan Modification Process?

Can a Loan Modification Specialist speed up your Loan Modification Process ?

Loan modification is no doubt one of the most promising ways to save one's home and steer clear of foreclosure. And as one might expect, the housing crisis has fueled a huge expansion in the loan modification industry-every state has at least a dozen companies specializing in loan modification help. But while that means more choice for struggling homeowners, it also means a bigger risk of bad service. If you want the most out of your loan modification, take the time you need to find the right loan modification specialist.

Ban Proposed on Loan Modification Upfront Fees

Federal regulators are considering a ban on the upfront fees commonly charged by loan modification companies for helping troubled homeowners. The move is part of a nationwide crackdown on loan modification and mortgage scams, which prey on borrowers desperate to stay afloat amid the recession.

Government officials and attorneys-general from 12 states met last Thursday to coordinate their efforts to stop mortgage fraud. U.S. Attorney General Eric H. Holder Jr. sent a clear warning to fraudulent companies, saying anyone who commits mortgage fraud will be found, charged, and put in jail.

Efforts to stop mortgage fraud have been in place since April, with federal officials working with attorneys-general from different states. In California last July, Attorney General Jerry Brown filed suits against 14 companies and 21 individuals linked to various foreclosure-prevention scams in a project called Operation Loan Lies.

By the end of July, the Federal Bureau of Investigation (FBI) was investigating over 2,600 mortgage fraud cases, many as part of a multi-agency effort launched earlier this year. The move to ban upfront fees is aimed at expanding these efforts to other debt scams, according to Treasury Secretary Timothy Geithner.

Fraudulent companies have been known to charge up to $4,000 in upfront fees without any guaranteed results. Most states have little or no legislation against such charges; in California, for instance, only Los Angeles has completely banned upfront fees. Two bills are currently awaiting approval from the state, each proposing a different approach to the ban.

Federal Trade Commission (FTC) chairman Jon Leibowitz announced after the meeting that the FTC might impose the ban on mortgage modification upfront fees nationwide later this year.

Loan Modifications Reach 1.77 Homeowners, Study Shows

A private study showed that an estimated 1.77 million homeowners have avoided foreclosure through loan modifications since January 2009, representing a 20% improvement in foreclosure prevention since government efforts began two years ago.

The study was conducted by HOPE NOW, an alliance of private mortgage servicers, insurers, investors and counselors, and tracked foreclosure and loan workout data from July 2007 through July 2009.

According to the report, foreclosure starts went up by about 30,000 from June to July, but completed sales went down by over 3,000. The number of homeowners in serious delinquency—those who are 60 days or more overdue—also increased by about 5.9%.

July was one of the strongest months for the housing sector, as over 250,000 borrowers were helped out of foreclosure and foreclosure sales saw a significant drop. HOPE NOW executive director Faith Schwartz believes this proves that the housing industry is dedicated to helping people stay in their homes.

Mortgage servicers are continuing their foreclosure intervention efforts and urging at-risk homeowners to get help from trusted sources, Schwartz added. HOPE NOW has a help hotline, 888-995-HOPE, for troubled borrowers where they can get loan modification advice and contact their servicers directly.

In a separate report, the U.S. Treasury revealed that 230,000 trial modifications were initiated in July, which is expected to boost the numbers further. Both government officials and industry players remain hopeful that the Obama administration will reach its goal of granting 500,000 loan modifications by November this year.

HOPE NOW is currently implementing homeowner assistance programs in alliance with various non-profit organizations. It also works with a number of government and government-run offices, including the Treasury, the Federal Reserve, Fannie Mae, and Freddie Mac. The group has so far helped over 40,000 homeowners and continues to hold outreach events nationwide.

Foreclosures Also Put Renters At Risk

As increasing numbers of rental properties fall victim to the housing crisis, renters are finding themselves equally at risk as homeowners. Real estate data provider RealtyTrac reports that rental foreclosures have almost doubled since January in some cities, leaving thousands of tenants hanging.

According to the nonprofit Oregon Law Center, renters are often unaware of their risk for eviction and usually have no reason to expect it. There have been cases where renters had to be evicted prematurely, even if their leases were still good for several months.

Studies by the National Low-Income Housing Coalition show that about one-fifth of all foreclosed properties are occupied by renters. Some states have addressed the problem by proposing laws to protect renters in the event of foreclosure, but few have been actively pursued.

In Oregon, such a law is scheduled to take effect later this month. Under the law, tenants will be allowed to stay in foreclosed properties for the duration of the lease, or 90 days after the auction date if they are on month-to-month terms or if the buyer intends to use it as a primary residence. Renters also have the option of applying their deposit to their last few months of stay, provided they formally inform the owner of their intent to leave.

The law will also require foreclosing entities to inform both the landlord and the tenants as soon as the foreclosure process begins. To get protection, renters will have to submit a copy of their lease or rental agreement to the bank at least a month before the foreclosure date.

Prior to the law, tenants were only given 10 days to leave the property after the home is sold off. Experts say it is impossible for some renters to obtain the funds for moving, including the security deposits and utilities, in such a short time.

Check out the State Foreclosure Laws or talk to a loan modification specialist to discuss your case.

Mortgage Servicers Promise to Boost Loan Modifications

A number of leading mortgage servicers have pledged to accelerate their loan modification efforts following a meeting with administration officials in Washington Tuesday, the U.S. Treasury Department reports.

The meeting, according to U.S. Treasury Secretary Timothy Geithner, provided an opportunity for officials and industry leaders to find new ways to step up the program. Geithner added that too many homeowners remain at risk, and the new solutions will help relieve them faster.

The Making Home Affordable program has resulted in over 200,000 loan modifications since its launch, a far cry from its initial goal of 4 million borrowers. The government has since reworked its goals and plans to bring the number up to 500,000 by November.

Mortgage Bankers Association (MBA) spokesman John Mechem said that servicer CEOs and government officials agreed to refine the loan modification process and set more consistent rules on handling applications, particularly those backed by Fannie Mae and Freddie Mac.

During the meeting, a number of representatives also criticized the numerous “piecemeal changes” made by the administration since the program’s launch, according to MBA chief economist Jay Brinkmann.

Brinkmann added that such programs should not be announced before they are fully planned out. He said that they bring in lots of calls from curious borrowers, which clogs their call centers and slows down other services.

Making Home Affordable is carried out by banks that received federal assistance from the Troubled Asset Relief Program (TARP), including Fannie Mae and Freddie Mac. The plan requires them to modify the loans of at-risk borrowers to reduce their monthly payments, either through term extensions, forbearance, and lower interest rates.

Report Shows Loan Modification Program May Fall Short of Goals

Congressional investigators fear that the Obama administration’s $50-billion loan modification program may not meet the assistance goals it had promised during the launch in February.

According to the Government Accountability office, the projections to help up to 4 million troubled homeowners may have been “overstated”, having been based on unproven assumptions about the housing market and the U.S. economy.

The report revealed that about 50% of delinquent borrowers were likely to sign up for the mortgage modification program, as opposed to the 65% estimated by the Obama administration in March. As of late July 2009, only 31 mortgage companies had joined the initiative and about 180,000 borrowers had received trial loan modifications.

Since the program’s launch, foreclosures and defaults have continued to rise nationwide. According to real estate information provider RealtyTrac Inc, the number of at-risk households rose by almost 15% during the first half of the year, mostly because of unemployment. Experts believe the rise will continue until mid-2010.

Herbert Allison, the U.S. Treasury assistant secretary for financial stability, issued a statement admitting that it was hard to estimate the reach of the loan modification program. He added that the government plans to update the projections on the program’s cost and participation rate.

The government has been actively urging participating servicers to beef up their efforts by hiring more staff and improving personnel training. Housing Secretary Shaun Donovan and Treasury Secretary Timothy Geithner are scheduled to meet with company executives Tuesday, and are planning to make detailed performance reports on each company starting next month.

Loan Modification Delays Slow Down Housing Rescue Plan

President Obama’s loan modification plan has helped far fewer homeowners than expected since the program’s launch in March, officials reported today. According to the report, about 325,000 borrowers have received loan modification offers, a far cry compared to the more than 1 million foreclosures filed in the same period.

Of these, about 160,000 are in the trial or permanent stages, while more than half are still in the offer stage. Officials are still not sure how many borrowers have passed the trial phase and received mortgage modification offers.

The trial phase is a three-month period during which the servicer determines whether a borrower can stay current on the reduced payments. The loan modification becomes permanent once the borrower passes the trial terms.

Experts and homeowners alike point to misleading information and long delays in the process as the main reason for the program’s slow start. Some believe the foreclosures will continue even if the program picks up.

Others insist that loan modifications are simply too labor-intensive. According to Joel Naroff of Naroff Economic Advisors, it mostly depends on how willing or able a servicer is to take on the responsibility. He also added that foreclosures cannot be prevented unless other problems such as unemployment are duly addressed.

The government is now urging participating mortgage servicers to speed up the process by hiring more staff, improving training, and expanding their call centers. It also plans to start publishing monthly reports on each servicer’s performance starting August 4. The 27 servicers are expected to discuss the plan with officials in Washington on July 28.

Foreclosure Freezes Didn't Help Borrowers | Foreclosure News

Foreclosure Freezes Didn't Help Borrowers | Foreclosure News

The foreclosure moratoriums imposed by several lenders late last year did little to stop the rise of mortgage defaults and may even have worsened the problem, due diligence analyst Clayton Holdings said in a report today.

According to the report, 93% of the cases stalled by the moratorium still went into foreclosure by April, as soon as the ban was lifted. Many were also moved to real estate owned (REO) status, wherein the property is effectively owned by the bank.

For servicers who did not impose a foreclosure freeze, 89% of the cases expected to end in auctions by March remained in the foreclosure process or in REO.

Loan Modification Explained

If you have trouble paying your loan then check whether you are eligible for loan modification. Even unemployed homeowners with a source of income qualify for a loan modification. Here is a presentation explaining the loan modification facts.

Loan-Modification

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Loan Modification Up 57% in Q1 – FHFA

Mortgage servicers Fannie Mae and Freddie Mac granted loan modifications to over 37,000 homeowners in the first quarter of 2009, a figure 57% higher than that of late 2008.

In its latest Foreclosure Prevention Report, the Federal Housing Finance Agency (FHFA) showed that 52% of loan modification agreements resulted in reductions of over 20%, compared to a mere 2% in the last quarter.

The report also showed that about 87,000 foreclosure prevention actions (including loan modification, forbearance and repayment plans) were completed in the first quarter, a 20% increase from late 2008 and more than twice the volume from this time last year.

Delinquent mortgages were also on the rise, but the FHFA claims it is still below the industry average of 9.2%. By the end of the first quarter, 3.6% of GSE mortgages were at least two payments behind, compared to 6.1% of Veterans’ Affair and 10.2% of Federal Housing Administration (FHA) loans.

Serious delinquencies—mortgages more than 90 days overdue or already in the bankruptcy or foreclosure process—were also slightly on the rise. The numbers rose from 2.1% in the last quarter of 2008 to 2.8% in the first quarter of 2009, nearly three times the volume one year ago.

FHFA Director James B. Lockhart encourages mortgage servicers to continue working with borrowers and aggressively help those who qualify. He says that these loan modification efforts are crucial to the stabilization of both the economy and the housing market.

The figures include loan modifications granted under the Streamlined Modification Program, launched in November 2008. The figures do not include the loan modification volumes from the Home Affordable Modification Program (HAMP), as it was still in development by mid-quarter. More Loan Modification News

Are you Eligible for Home Loan Modification ?

Home Loan Modification is a process by which a person facing financial hardship can get his of her loan terms modified. This helps home owners save their homes from foreclosure.

But not every can qualify for Home Loan modification. One has to contact the lender to know whether he or she is eligible for a Home Loan modification. Here are a few factors which if you fulfull then you may be eligible for a Home Loan modification:

• The home is your primary residence, and you have no ownership interest in any other residential property, such as second homes.

• Your existing mortgage was originated on or before January 1, 2008 and you have made at least six payments.

• You are not able to pay your existing mortgage without help.

• Your total monthly mortgage payments due were more than 31 percent of your gross monthly income.

• As of March 1, 2008 if you have a fixed rate mortgage. As of March 1, 2008 or the date of your loan application if you have an ARM
  

• You certify that you have not been convicted of fraud in the past 10 years, intentionally defaulted on debts; and did not knowingly or willingly provide material false information to obtain existing mortgage(s).

If your Home Loan Modification application is approved and you are able to strike a good deal your lender then the New mortgage will replace the current mortgage on your Home.