LOAN MODIFICATIONS

Probably the single best advice we give to potential clients is that they can negotiate their own loan modification.  You do not need to pay anyone to do it for you.  However, we do forewarn that it will take a great deal of time, energy, and patience - besides proof of income - to negotiate a loan modification.  Our office has worked on these for some of our clients and it is an extremely frustrating process.

Since July 2010, the banks must now make a decision within thirty days.  This is much faster than the months to a year the process has been taking.  However, it puts an extreme burden on the homeowner to supply the necessary documents completely and immediately to the bank.

Please take the time to visit the Obama administration's website - Making Home Affordable - and read the information provided there. There are simple question and answer forms that can help you determine if you are eligible to benefit from the programs available. Check that site often because the information is constantly changing - such as the addition of loan modifications available for second mortgages (2nd lien modifications).  The hotline is an invaluable resource.

Our office used the hotline 1-888-995-HOPE (4673) to report a practice that one of our nation's largest lenders was doing to impede loan modifications. Within one day of reporting the practice, it was changed. The housing counselors provided by this site are free and are very helpful.  We encourage persons to call.

We persuade everyone to please be pro-active. We are here to assist you if you find the task too daunting.

If you decide to have an attorney assist you, here is a rough outline of the process.

• The initial meeting with the lawyer and client preparing an application for a loan modification will take about 3-6 hours. If your home is in foreclosure and you have requested a settlement conference -- The average case probably gets adjourned 4-6 times in the settlement conference part. In between adjournments, your attorney will be negotiating with the servicer and/or opposing counsel. For a case that is not litigated, the average commitment in time will be 25-50 hours.

As 2010 evolves, our office has found that loan modifications are essentially only being accepted in the New York City area for homeowners who are employed or have excellent proof of their verified income; plus if they are "underwater" (owe more than the property is worth) the banks will be more willing to modify the loan which is often more cost effective than the foreclosure process. 

Government programs change monthly.  Fannie Mae launched in August 2010 a new website with information which is very helpful.  Please visit this link, for further information about a HAFA (Home Affordable Financing Alternatives) program which may help home owners who were denied a loan modification.

HARP is designed specifically to help borrowers who may be ineligible for traditional refinancing due to loss of home value or because they have little (or no) equity. Like other refinancing options, with HARP you receive a completely new mortgage with new terms, interest rates and monthly payments. The new loan completely replaces your current mortgage and may lower your payment, which could help improve your monthly financial situation.

HARP may be an option if:

* You are current on your mortgage payments (i.e., haven’t been more than 30 days late in the last 12 months)
* Your home value has decreased
* Your first mortgage does not exceed 125% of the current market value of the home
(i.e., loan-to-value)
* Your loan is owned by Fannie Mae or Freddie Mac

For complete details on HARP eligibility and requirements, go to makinghomeaffordable.gov.

For those homeowners who recently lost their jobs and are receiving unemployment benefits, the banks can offer you a forebearance (a temporary halt) on paying up to three months of your mortgage payments.  Those payments will be added to the "back end" of the loan.  When you speak with your lender, you can request information about a forebearance of your loan.   Some forbearances allow a reduction of up to 30% of your monthly mortgage payments (principal and interest only). Check with your mortgage company to determine if you qualify and the forbearance reduction percentage that may be available to you.
This is the link for the forebearance section on Fannie Mae's website.  You can access a calculator to assist you in payment calculations.