Since the Home Affordable Foreclosures Alternative (HAFA) has expired, those facing foreclosure face new challenges with their homes. The HAFA program allowed people who were in foreclosure to do a short sale on their homes and completely release them from their debt after selling their property. This also allowed those who were in foreclosure to avoid being taxed on the money lost by the bank resulting from the short sale.
Now that this program has expired, those in foreclosure will have less options available to them. Those selling their homes may be held liable by their banks for losses incurred. Can you imagine what it would be like to have to pay back tens of thousands of dollars on a propertty you no longer own?
This program will not affect those who still have equity in their property because they can simply sell their home and pay off their loans. It is those who are behind who have fewer choices. If a homeowner owes more on their home than what it is worth and their loan is owned by Fannie Mae or Freddie Mac, they can try to refinance under the Home Affordable Refinance Program (HARP).
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This leaves us to with those who fell behind or are close to falling behind on their loans and want to keep their homes. If this is your situation and you are afraid you may lose your house and want to keep your house, pay attention to the rest of this article.
As part of President Obama’s Making Homes Affordable program, he passed the Home Affordable Modification Program also known as HAMP. The HAMP program allows those upside down (meaning they owe more on their homes than what there house is worth) on their homes to get a loan modification on their mortgage.
A loan modification is a change in one or more of the loans terms. By loan terms, that could mean reducing the interest rate, extending the term (from 30 years to 40 or just resetting the loan term back to 30), changing the interest rate type from adjustable to fixed (either permanently or temporarily) and adding past due payments, taxes, and or fees back in to the loan amount and re-amortizing the loan out over the new term. Home loan modifications can reduce interest rates to as low as 2%.
Many people have heard horror stories of people who tried to get a loan modification in the past. Banks were recklessly losing confidential client documents, stalling, giving conflicting information, dragging the process on indefinitely, having clients make payments and then not giving modifications, and even forcing sale dates on people without proper notice.
Many people even lost their homes because they paid companies who promised to get them a loan modification. The loan modification business can be a dirty business. There have been reports all around the country of people who trusted a voice over the phone with their homes, paid them a fee and never heard back from the company again, or even worse, the companies took their money and closed down. There are even companies out there calling themselves law firms and they are not even attorneys.
With so many people being victimized by the foreclosure scammers, who can you trust? That is a good question and homeowners must do their due diligence before hiring a company to modify their loan. Most people will spend hours researching flat screen TV sets and checking for the lowest price but won’t think twice before handing out money to someone who promises to save their home. But not all loan modification providers are like that.
Those facing foreclosure should go to a reputable company and research the company before getting a modification. Homeowners should Google the company, Google the people who work there, and make sure they are affiliated with a reputable law firm. Fees paid for loan modifications should go into an attorney escrow account and paid out only after services are provided.
Those seeking loan modifications should drive out to the office of the people they are working with to make sure they are a real company. They should also meet the people who will be working on their loans and feel comfortable with them and ask them to provide you with samples of loan modifications they have completed. Like they always say, believe half of what you hear and all of what you see.
Once you have found a reputable company to assist you with your loan modification, they will take down information about your loan, lender, interest rate, homes value and income. Then they will analyze that to make sure your loan will qualify for a loan modification program. The next step is for you to complete some paperwork and supply your income and housing expenses. Your loan modification company will prepare a package for your loan modification to be submitted to your lender and follow up with your lender regularly.
Most of the people who try to get a loan modification on their own fail. This is typically because their loan does not meet investor guidelines, a modification does not make sense for their situation, or the modification package was not filled out properly. An experience loan modification firm or attorney should know right up front whether your loan will qualify or not. When banks see you are working with an attorney or company and they are following up regularly, they will often award a modification faster.
Many of the banks have implemented new systems to help assist their clients who are in need of loan modifications and are now able to get the loans out with some predictability. Banks have hired a lot more staff to handle the volume of loan modification requests properly. As long as the loan meets the investor guidelines and the packages are submitted properly, most people should get their loans modified.
In the beginning of the foreclosure epidemic, the local sheriffs department did not have the proper staff to deliver all of the foreclosure summons. Courts did not have adequate staff. Many foreclosures were delayed because the foreclosure summons were not being delivered in a timely fashion.
Another challenge people facing foreclosure will face in 2013 is that both the courts and the banks have hired more people to assist in the foreclosure process. This means people will not have the time they had before. It was quite common for people to stay in their homes for up to 2 years without making any mortgage payments on their homes. This is not the case now and more people are starting to lose their homes faster than before.
Those who are in foreclosure need to take action promptly. With the new systems that are in place at the banks, sheriffs department, and court house, many people are losing their homes more quickly. With the banks cooperating now and actually giving out loan modifications, there is no reason not to apply for a modification.
Unfortunately the Home Affordable Modification Program will not be around for long. The HAMP program was supposed to end in 2012 and was extended out until the end of 2013. There has been some talk among congress to discontinue this program early so it is important to act fast if you really want to keep your home.
About the Author: Brian Saviano is the Co-Founder of Professional Loan Consultants, the number one provider of loan modifications. Our staff has successfully completed more than 500 loan modifications. For more information on how to stop foreclosure, please visit: http://www.ForeclosurePreventionTips.com/How-To-Stop-Foreclosure.
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Copyright © 2013 Yuwanda Black for Foreclosure Business News. Legal Disclaimer: The information dispensed on this blog is not to be taken as legal advice; it is for general purposes only. Please consult a qualified professional (eg, attorney, accountant, real estate agent, etc.) — in your jurisdiction — before taking any action based on the information listed here.