As a consumer, you must have a clear understanding of the program you are selecting.  Do not let any lender give you answers to questions that are not clear or you do not understand.  It is the consumer’s responsibility to understand exactly what their monthly mortgage payment will be and if this payment includes property taxes.  The consumer needs to select a program what meets their financial requirements.

When meeting with the lender, the consumer must be do the following:

• Always be truthful to the lender
• Have complete copies of last two (2) federal tax returns including all W-2’s on all borrowers
• Have copy of most recent paystub for all borrowers on the transaction
• Have a copy of last two (2) months bank statements on all accounts and any stock/investment accounts
• If refinancing, have a copy of most recent mortgage statement
• If refinancing, bring copies of original documents in regard to mortgage
• Prepare a list of all assets, including names of banks, average balances along with a list of all liabilities, i.e., auto loans, credit cards, 2^nd home mortgages.  Note the lender can receive this information via a copy of your credit report.  But having the information available at the meeting is important.

At this meeting, the lender will be able to approximate, what your debt to income ratio. The final ratio is determined by credit underwriting. 

By having this information available, the lender should be able to discuss with the consumer various types of loan programs, which will meet the consumer’s financial position.  If you are a new home buyer, it is important that you have money available for a down payment. 

So what is the debt settlement option? Debt settlement is a method by which a third party negotiations on behalf of the consumer with their lenders to reduce their outstanding balances. Typically, this program works only for unsecured credit cards but may include any other types of unsecured debt like medical bills.

Today’s consumer is asking themselves, “How am I going to get out of debt?” The answer to that question is to consider a debt settlement program as a method to resolve their current financial situation. Consumers have not faced this type of financial climate since the Great Depression and in that situation; they were not overburden by unsecured credit card debt. Consumers are riding a roller coaster of emotions because of their financial situation. This along with the fact they are facing financial hardships because of a lost of job, reduced salary, divorce, death or medical emergency.

The consumer needs to select an experienced debt settlement company.  This company should be able to provide answers to all the consumer’s questions in a way that the consumer clearly understands how the program works.  The consumer should ask for the following:

• Upfront copy of all documents along with fee and cost schedules
• A company profile
• List of accreditations or afflictions, i.e., Better Business Bureau and associations

With any program, there are pros and cons when considering a course of action.  It is the consumers responsible to ask questions and do their research on the debt settlement company they select.

 The con’s are:

·         Tax ramifications – consumer will need to report any amount of forgiven debt that exceeds $600. This means an increase to your tax bill.

·         Credit score will drop

Some of the pro’s are:

• One single monthly payment
• Avoiding bankruptcy as an option. Always consult with an attorney about this step.
• Stopping collection calls
• Possible elimination of lawsuits and other legal action
• Stop any extra charges to the credit card

If you have a loan with CitiMortgage and are having trouble keeping up on your mortgage payment, you may be eligible for a loan modification with Citi.  The first step is to call the loss mitigation department at Citi Mortgage and see what you need to do to get the mortgage loan modification process started.

Citimortgage Loan Modification Requirements Continue Reading »

IndyMac Federal Bank will start a new program to systematically modify bad mortgages with a loan modification.

What Loans Are Eligible For Mortgage Modification With IndyMac?

The streamline loan mods will be available for borrowers who have a first mortgage that is owned or serviced by IndyMac that are seriously in default and are facing foreclosure.  IndyMac will work with owners show are unable to make their mortgage payment because of a reset or change due to an arm mortgage reseting. Continue Reading »

What would be the first step to modify your mortgage with Bank of America?  I just spoke with a client who originally got an option arm with Countrywide.  Countrywide was purchase by Bank of America.  If you originally had a Countrywide mortgage you will need to speak with someone at Bank of America now for a loan modification.

Call Customer Service First To Try And Get A Loan Modification

If you are trying to get your mortgage modified, your first call should be to your lender.  Most lenders have loan work or loss mitigation departments to deal with the pre foreclosure homes.  You will most likely need to provide information on your financial wherewithal.  If you do not have any income, you will probably not be able to get your loan modified.  You have to be abel to demonstrate that you will be even able to handle the new payment that can be worked out for you.  You may have to give your lender your tax returns, pay stubs and financial statements to be even considered for a loan modificaiton.

Should I Hire A Loan Modification Attorney?

I have seen law firms starting to advertising for loan modifications.  The truth is that you can probably do a loan mod yourself without an attorney.  If you feel more comfortable using an attorney to handle the modification , I would not try to talk you out of it.  You have nothing to loose to try and do it yourself first however.

I saw a law firm call Phillips and Associates advertising loan modification services.  Do you need to hire a law firm like Phillips & Associates to do a loan modification or can you do it yourself?  The truth is that you do can do a loan modification yourself and save yourself a retainer fee.  I would hire an attorney or someone else to handle your mortgage loan modification only if you are paralyzed by fear and know that you would be taking ineffective actions in getting it done.

Do I Need Loan Modification Services? Continue Reading »

Will My Mortgage Company Modify My Loan Even If I Am Not Late On My Mortgage Payments?  Most mortgage companies and banks will not want to speak with you until you are behind on your mortgage payments.  I know a person that is going late on their mortgage on purpose just because they will not talk to him.  I do not advise just stopping payment to your mortgage company.  In the instance I was speaking about earlier is in regards to a gentleman who has a $6000 a month mortgage payment that they can see that they will not be able to make in the future due to a job loss.  He can see the future coming straight at them.

Contact Your Bank Before You Are Late On Your Mortgage

It is wise to contact your bank before you are late on your mortgage payment.  Some banks and lenders do have policies that allow for a loan modification to be completed even before a late payment has occurred.  If you are in an arm or have an option arm you may be eligible for an automatic loan modification.  You would just need to contact your lender about this.  I would not make any assumptions about loan modification until you have all of the information.

How To Negotiate With Your Bank For A Better Mortgage Rate.  If you are having a hard time making your mortgage payment, your bank may be willing to renegotiate new loan terms with you.  Through the loan modification process you can actually get a new interest rate, lower principal amount or even a forbearance agreement.  Most lenders including Bank of America, Chase, IndyMac, Wamu, Washington Mutual and Wells Fargo have dedicated departments set up just to help borrowers and homeowners work out new mortgage terms so they can stay in their home.  You can either go online or call your bank to ask for the loan modification or loss mitigation department to get started.

How Do I Get Started On A Loan Modification? Continue Reading »

How do I apply for a loan modification with my bank? Do I really need to use a loan modification company to negotiate new terms for my mortgage?

Who Can Do A Loan Modification And Get Paid? Continue Reading »