July 17th, 2009 at 02:53pm
Under Business Law
Much of the dissatisfaction directed toward loan modifications and the companies that operate in that space comes from people that have been turned down for one. There are many factors that can derail the loan modification process:
1) No hardship – The biggest requirement in determining eligibility for a loan modification is verifiable financial hardship. This hardship can come in many forms including upward mortgage rate adjustments, the loss of a job, being upside down in the house, etc. Where no hardship can be determined the loan modification will stop in its tracks. The one positive, for both client and company, is that the lack of hardship can usually be determined early on in the process, thus saving time money and effort.
2) No income – This is part of walking the fine line between hardship and too much hardship. Lenders in general have tightened up on income levels considerably since the first half of 2008. The lenders’ wake-up call came in later in 2008 when a study showed that half of loans modified were back in default only six months later.
3) Equity in the home – Lenders will typically back away from modifying a loan if there is equity in the house for a couple of reasons. The first one being that it’s much easier for the bank if the homeowner can get out whole by selling the house. The second reason is that should the bank need to foreclose the equity cushion could turn the foreclosure in to a profit for the bank once they resell the house.
4) Pending bankruptcy – A deal killer for obvious reasons.
5) Initiating the loan modification too late in the foreclosure process – There are rare examples where foreclosures are avoided at the 11th hour but don’t count on it. If the sheriff is scheduled to be knocking at the door at any moment a loan mod is extremely unlikely to happen.
6) Being current on the mortgage – This is a controversial point with valid arguments from both sides. Some banks won’t look at a loan modification unless payments aren’t current, some will. This varies from lender to lender so if missing a payment does not sit well with you, getting that information ahead of time will take care of any surprises down the line.
7) Lies, omissions, and inaccuracies – These factors are the ones that fall right in the lap of the applicant and will typically result in forfeiture of some, if not all of the loan mod fees. To compound the problem, these deal killers are usually found long after the initiation of the process costing valuable effort, time and money. Applicants sometimes forget that the loan mod is going to be done with their current lender who, in all likelihood, still has the original doc’s from the mortgage to be modified. Pleading hardship while forgetting to include the $2 million brokerage account from the original application generally makes people angry and will crush the loan mod immediately. For more information call 1-800-470-0865 or visit Feldman Law Center.
The information contained herein is provided for general information and advertising purposes only and is not intended to convey a legal option nor legal advice for any particular case or situation. Nothing in this article shall create an attorney-client relationship. Nothing sent to this law office via e-mail shall constitute an attorney-client relationship. Nothing contained in this article shall be construed to be a guarantee or prediction of result. Prior results are provided for general information purposes only and do not guarantee, warranty or predict a similar outcome with respect to any future matter. Results achieved depend on individual circumstances and not everyone will qualify or be successful in restructuring their mortgage loan.
The
Feldman Law Center is one of the premier
loan modification companies in California, and our skilled loan modification professionals are trained to successfully and carefully guide homeowners through the loan modification process.
By Law Article
July 17th, 2009 at 04:38am
Under Estates Law
Hope and optimism emanating from the announcement of the Obama Administration’s “Making Home Affordable” plan have been replaced by the cold reality that the program has gotten off to start deemed by industry watchers as “anemic”. After almost four months since President Obama first announced the $75 billion mortgage rescue effort, the administration continues to tweak the program in an attempt to reach its originally stated objective of saving up to 5 million homeowners from foreclosure. Standing between the anemic start and lofty goals of the program are four roadblocks:
1) Overloaded loan modification processors – While the specifics of the plan were released in the first week of March, lenders couldn’t start handling applications until systems were re-programmed and processors were brought up to speed, which took an additional four to six weeks. Processors were immediately buried with stacks of applications that had been accumulating during the conversion to the new guidelines. Participants in the process report that servicers are still digging out from the initial rush as applications continue to flood their desks. Troubled borrowers, many backed up against the possibility of foreclosure, have become increasingly frustrated to the point where they have abandoned the process to retain their own legal assistance. JP Morgan Chase spokesman Tom Kelly recently said of the ramp-up, “It’s an enormous task. We’re moving quickly, although not as quickly as an individual might wish.”
2) Investors – The massive sums of money that supported the real estate/mortgage boom came from investors on Wall Street, pensions, and other institutions. Servicers say those investors are now balking at some of the terms being presented when a loan needs to be modified. The net present value test, a little known aspect of the plan, allows for a calculation to determine whether the greater return for investors will be achieved via modification or foreclosure. In the modification versus foreclosure decision, investors have been threatening lawsuits against servicers when the servicers are deemed to not be acting in the best interests of their investors. The threatened legal action adds another layer to the home loan modification process and can draw out the approval process even more. The “safe harbor” bill recently passed by Congress was intended to alleviate that logjam by protecting servicers from investor lawsuits but it’s likely that lawsuits will arrive on the servicers doorsteps anyway, safe harbor or not.
3) Lenders – Lenders are caught in a three sided bind between the above mentioned borrowers/investors and their own capital structure. No longer required to mark their loans to market, they can carry the value of the loans in their own portfolios at values they can rationalize, whether factual or not. Loan modifications could generate reviews of portfolio values, and nobody wants to go there in the current environment.
4) Unemployment – According to John Taylor, head of the National Community Reinvestment Coalition, “Unemployment is becoming a bigger factor than almost anything.” When sub-prime mortgages started blowing up it was attributed to the risks inherent in lending to lower quality borrowers. Increasing unemployment, in addition to taking down the lower quality borrowers, is now hitting prime mortgages. In fact, primes are now going into default at a much faster rate than sub-primes as previously solid borrowers are now being affected by the contracting economy.
Of the four roadblocks, the toughest barrier is unemployment due to the fact that, regardless of credit scores, if a homeowner doesn’t have a job a loan modification isn’t going to help. Short sales, cash for keys, or foreclosure become the next options. At that point every side of the three sided bind ends up on the losing end.
By Law Article
July 15th, 2009 at 02:52pm
Under Business Law
The Feldman Law Center, a Law Firm that provides nationwide loan modification and debt relief services announced the recent acquisition of former Lending Tree Vice President Mr. Jerry Koller to head up their expansion. Mr. Koller brings us a wealth of knowledge, says Mr. Steven C.Feldman as Koller has worked for Mr. Anthony Hsieh Former ETRADE Financial CEO who then founded HomeLoanCenter.com and sold it to Lending Tree in 2004 for an undisclosed sum. With over 20 years in the finance and mortgage industry Feldman feels the long awaited acquisition could not have come at a better time.
Feldman Law Center was one of the original loan modification attorneys providing loan modification services throughout the country and has grown at a record pace over the past year. Back in the day, homeowners facing foreclosure or immanent hardship due to interest rate adjustments didn’t know what a loan modification was and with the recent development of our Internal Management System Software and the acquisition of Mr. Koller we can structure our growth accordingly as to not adversely effect our day to day operation. The newly developed IMS system will improve the way we do business and allow us to process and negotiate over 5,000 loan modifications per month. Currently the Feldman Law Center manages a large case load and negotiates pools of loan modifications with the major loan servicers like Country Wide Home Loans, Chase and CITI Mortgage. The original staff of five has grown to over 65 in a year that most new nothing of loan modifications being used to stop foreclosure. The Law Offices occupies over 10,000 sq.’ in Mission Viejo, Ca. and is currently negotiating the lease of another 35,000 sq.’ in Irvine, Ca. Coincidently within a mile of the former Lending Tree campus Mr. Koller frequented. Feldman sees the rapid growth as the next “refi boom” and it should be smooth sailing with Koller aboard. “We couldn’t do it without a man of his caliber” says Feldman.
Mr. Koller went to every Loan Modification Company and Law Office that provides loan modification services in town before settling on the Feldman Law Center. When asked why Koller says, “He has the reputation and I want to work for the best”. When asked why loan modifications, Koller says “I like helping people and I miss the fast paced operations”.
By Law Article