If individuals are having issues with modifying their loans or getting a response from their lender(s) during a short sale, they need to be asking their lenders if they are carrying private mortgage insurance. Many homeowners are completely unaware that just because they put 20% down or did some type of hybrid loan (80/10/10 or 80/20) to avoid having to pay the extra mortgage insurance (otherwise known as PMI or MIP depending on type of loan) that the lenders can still take out an insurance policy after the fact to cover themselves. If your lender(s) are not cooperating, there is a good chance your loan is insured by one of the private mortgage insurers. The lenders are all about making money. There is nothing ethical or moral about their decisions except for the bottom line. If they foreclose on your home, they file a claim for their loss and get your bad loan off the books. Why should they modify it? There is no incentive for them to do so. Your home is considered a toxic asset (oxymoron) and frankly the banks want you to foreclosure so they can get it out of their portfolio.
Most modifications consists of interest rates adjustments only. Very rarely does it involve principal reduction. So in a sense, you will still be "renting" your home until the value goes back up. Factor in the average 5-6% appreciation when the economy improves and you could be "renting" your home for a very long time. The principal balance owed will be upside for sometime continuing to drag down the lenders portfolio values. You must keep records of every conversation especially all phone operators id numbers. Keep in mind that the private mortgage insurance can be taken out at any time by your lender. If your loan is not Fannie or Freddie, that means a private investor(s) are holding the note and there is a strong possibility your loan will have this hidden insurance without your knowledge.
First step: Find out if your loan has private mortgage insurance paid for by the lender themselves. Call your lender 3 separate times to make sure you get the same answer at least twice. Most lenders have call centers of people who get yelled at all day. Call early in the morning for best answer before they have been abused. Many lenders are on East Coast Time.
Second step:
If Yes, take your issue to a higher source. I will indicate resources to file a complaint in a subsequent post. Get the name of the private mortgage insurer and make them aware that your lender is not co operating with you. Many of these mortgage insurers are now coming after the lenders for their losses when they find out the lenders had an opportunity to prevent the foreclosure and did nothing about it.
If No, good luck, although this is highly not advisable but a known fact in the industry, "Why fix what aint broke?" As long as you are making payments they have no incentive to work with you. No one will ever tell you to stop making payments, but why do the lenders only pay attention to the files that are at least 3 months behind in payments?
One organization that has an 80% success ratio in getting loans modified is http://www.naca.com/. Went to one of their presentations to educate myself after a newscast about them. (I dont always believe or trust what I hear on the news). Very legite and the people truly have a passion for stoping foreclosures. They are bullying the banks to modify and they have the connections to do so.
Step 3: Wait. Loan modifications can take from 60 days (smaller banks) to over a year with larger banks (such as Aurora Loan Services).
It is truly horrible what has come of our corporate industry ethics. It is not even human anymore. A cancer has infected the whole industry starting with Wall Street and spreading like wildfire throughout corporate america. There is much more happening behind what the morning news is told to report to the faceless unknowning minds that observe. All of the Obama plans have been made optional for the lenders to participate in and since his administration has apparently been unaware of this private mortgage scheme going on, all of his attempts to help have been bust. I think the last statistic I heard was that less than 10% of eligible loans had actually benefited from his plans. Why is that? (Hint, BECAUSE THE BANKS ARE GETTING PAID TO FORECLOSE ON YOUR HOME)
But who am I? Just a little unknown Realtor in Buckeye Arizona trying to keep my neighborhood and yours from declining more in property value by these infected tumors.
peace.
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