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Another Toxic Wave Of Bad Loans

It is no hidden secret that the most recent melt down in the real estate market was due to all the toxic loans that were originated prior to the year 2009. This led to the first wave of defaults in “sub-prime” mortgages that sparked today’s economic meltdown.  Homeowners that were effected by the first wave of mortgage defaults have had to resort to a loan modification San Diego program to save their homes, or worse became victims of a foreclosure, or a bankruptcy.

There is another wave that is on the not so distant horizon and no one is talking about it. This second wave of toxic loans is larger than the current  loans that put us in this situation in the first place.  This loans are know as “option arm” or “Alt-A” loans.  These loans are expected to hit there peak somewhere around the year 2011. 

 
The first wave of bad loans caused the banks to write down billions of dollars in bad losses and the caused the U.S stock market who purchased these toxic mortgage loans to lose trillions of dollars in market losses.  Many of these loans were purchased by middle income investors who were led to believe that these loans provided multiple options that regardless of what happened with the economy they would have several payment options they could choose to get them through any situation.  And since the general consensus at the time that real estate was going to keep going up they could not use a simpler, better loan product on their real estate purchase.

Many borrowers were mislead!  They were not properly explained the downside to negative amortization of the loan provision.  They were not explained properly how much these loans could adjust upwards.  Many homeowners that hold these type of mortgage loans are not aware that some of these type of loans could reset making their home mortgage payments double which will lead to more homeowners needing a loan modification San Diego program on their home loan or worse eventually lead to foreclosure on their home.

If you have a bad loan and have the ability of refinancing out of this loan a good source would be Home Loan Refinance Online  for the best refinance rates and loan programs.  If you home loan is up side down in value more than 105% loan to value you should consider a home loan mortgage modification on your loan to get out from under this bad loan so when interest rates start moving back up or your loan resets you will not put yourself in a crisis situation.

Publisher: Michael Kench

Publisher- Michael Kench Uncategorized Amortization, Amortization Loan, Borrowers, Distant Horizon, Downside, First Wave, Home Mortgage Payments, Loan Modification, Loan Product, Loan Provision, loan-modification-san-diego, Market Losses, Mortgage Defaults, Mortgage Loans, Negative Amortization, New Wave, Payment Options, Second Wave, Sub Prime Mortgages, Trillions, U S Stock Market

Loan Modification San Diego Update

Loan modification is becoming more and more common and majority of the borrowers are opting for it to prevent foreclosure. Incidence of loan modification in California is quite high. The factors that can be held responsible for such financial upheavals include recession, unemployment and political pressures on banks to support loan modification instead of foreclosure.

Loan modification San Diego incidence is the highest. And of 10 top cities experiencing highest foreclosure rate in US, California is among them. In Stockton, California maximum number of homes is facing foreclosure. In San Francisco, the incidence is comparatively less. However, there has been an increase by 83% as compared to 2006 and 2007.

The debt-to income ratio is considered

The loan modification program introduced recently aims at helping homeowners to protect their homes from foreclosure. Lenders usually take a couple of factors into consideration before accepting a loan modification request of a borrower. The criteria may differ from one lender to another. Lenders dealing with homeowners opting for loan modification San Diego Ca programs take the DTI or the debt to income ratio into consideration while approving a request. If the debt-to income ratio exceeds 95%, even if loan modification is granted, probability is quite high that the homeowner will not be able to keep up with the mortgage payments since the cash available for making monthly payments is not enough. So, a homeowner in California cannot avail loan modification of the DTI exceeds 95%.

On the contrary, if the debt-to income ratio is below 65%, lenders believe that the homeowner should be in a position to keep up with the payments. And a loan modification is not what the homeowner should be opting for.

Majority of the lenders prefer a debt-to income ratio between 60% and 95% before loan modification is initiated. There are many loan modification companies operating in California and they can help borrowers by negotiating with the lenders so that the homeowners don’t have to lose their homes.

Publisher- Michael Kench mortgage Avail, Borrowers, Contrary, Debt To Income Ratio, Dti, Facing Foreclosure, Foreclosure California, Foreclosure Loan, Lenders, Loan Modification, Maximum Number, Modification Request, Mortgage Payments, Political Pressures, Probability, Recession, San Diego Ca, Stockton California, Top Cities, Unemployment, Upheavals

During the loan modification process, one of the main components of a successful mortgage loan modification program will require the submission of a Hardship letter.  It is important to provide your lender with a true picture of your situation and put the lender in your shoes in understanding your situation. Here is an example of what a Hardship letter could look like to provide you with a format for a loan modification San Diego homeowners agreement on your home loan.

HARDSHIP LETTER EXAMPLE:

Date:
Borrower’s Name:
Borrower’s Address:
Borrower’s Phone #:
Our mortgage payments will be increasing soon due to our interest rate adjusting to a much higher rate. Due to the recent decline in the real estate market, we have no equity in our property.  We now owe more on our loan than what our home is worth. Currently, we are paying a total of $__________on our mortgage/mortgages. We have had no payment delinquencies.  After the rate increase in________________, we are looking to pay an additional $____________ per month. We are requesting a loan modification preferably a 30 year fixed rate mortgage with a lower payment. Ideally, we would like our mortgage payment to be $_________per month.
Although my wife and I both receive an income, my husband is the primary provider. However, with the currenteconomy, my husband, who is in the automotive industry, has not been receiving any overtime which cut his income in half. My position with the XYZ is also vulnerable at this time, with discussions of impending layoffs. We are asking for help now because we are trying to avoid an eventual foreclosure of our home. We have cut our expenses as much as humanly possible, and it is coming to a point where we are concerned about putting food on the table and can not handle a rate increase on our home loan.

We love our home and the city we live in. We would like to keep this house and raise our new born daughter here while making new memories.

Thank you for your time regarding this matter and for considering us for a loan modification San Diego agreement on our home mortgage loan.

Kindest Regards,
Borrower’s Signature, Date
Co-Borrower’s Signature, Date

This should  provide you with a guideline for writing a hardship letter, just remember to be honest with your situation and you will be one step further to a successful loan modification.

Publisher- Michael Kench Uncategorized loan-modification-san-diego

How To Write a Loan Modification Hardship Letter
 
When you reach the negotiating phase of a loan modification, your main goal is to reduce your monthly payment, mortgage rate, or reduce your principal balance, the major requirement and one of the most important leveraging tool at your disposal is the loan modification San Diego hardship letter. With a properly written hardship letter, your chances of loan modification success are greatly increased.  Your lender has to see what you are faced with, and the hardship letter puts your lender in your shoes so they can see the pain you are dealing with.

Important points to remember when preparing to write your hardship letter:

1. Emotionally Effective
You must let the reader of your hardship letter place them in a position that if they were in your situation, experiencing the hardship you are going through, how would they feel?  try to evoke some emotional response or feeling from the reader. If, you had a recent loss of income, let the reader feel your pain, ex: I am struggling to make my mortgage payment, putting food on the table to feed my children, we have cancelled our cable TV subscription, Internet, extra school activities etc.  What ever your are struggling with make the reader aware of it and you will have greater success in being granted a mortgage modification on your home loan.
2. Honesty
Make sure you are honest about your situation. Because your lender will check up on your recent financial records to see if your hardship letter matches up with your financial situation. If you are dishonest and the lender discovers this you will reduce or lose the opportunity of a successful loan modification. Just make sure that your hardship letter reflects accurately your current situation.

3. Think Like Your Lender
If you were the lender would you grant this individual or family another opportunity to save their home?  Will this homeowner be able to make their new payments under a loan modification San Diego program?  Will the loan modification allow the homeowner the ability to get back on their feet until their situation changes. Do they need a temporary, or long term solution to maintain their home loan? and does this make financial sense for the homeowner and for the lender?

Now that you have a better idea of how to write a powerful hardship letter that will make your chances greater for obtaining a loan modification on your home mortgage loan, you should also remember that if you feel that the process of doing a loan modification on your loan is to stressful to undertake on your own you may want to consider a loan modification company that negotiates on your behalf that will help you write an effective, heart felt, honest, letter, and handle all the lender negotiations on your behalf.  Remember, you have several options that are available to you.  You can purchase self help loan modification San Diego programs that can provide help and guidance in the loan modification process or,  you could contract with a professional to do it for you.  Drop me a comment and I can offer some recommendations.

Publisher Mike Kench

Publisher- Michael Kench Uncategorized loan-modification-san-diego

The Short Sale Option
If you do not qualify for the governments home affordable refinance or loan modification program and you are heading towards foreclosure.  You may want to consider a “Short Sale” on your home.

What’s a Short Sale?

A short sale is a process where a homeowner is facing a possible foreclosure, and has already attempted to do a loan modification San Diego program on your home loan. The homeowner enters into a mutual agreement with their bank or mortgage lender to accept a price for the property that’s less than the amount they actually owe on their current mortgage loan. After the home is sold in the short sale process, the homeowneris not entitled to any profits of the sale.

Short Sale Advantages

By successfully completing the short sale the homeowner avoids many of the problems that come from a foreclosure sale on their home.

Homeowner avoids having to go through the humiliating foreclosure process.

A short sale has less of an impact on your credit score. And typically you can re purchase  another home under H.U.D guidelines after 3 years vs five years after beign foreclosed upon. And the most important benefit of the short sale process is that the lender will potentially release you from any additional loan debt that remains after the sale is complete.

Lenders Advantage

With a short sale, lender does not have to go through the long process and the big expense associated with the Foreclosure process.  And the lenders accounting books look better with a good performing loan as to a negative notations on their book which works against their ability to lend to more home borrowers.
Some Disadvantges

Beaware that not all lenders will offer to relieve you of ant deficiencies after the home is sold in the Short Sale process and you may be held responsible for paying off any negative balance of the loan.  This is one major reason that it is advised to try and work out a loan modification San Diego home loan mortgage modification on your home loan before you have to result to this last resort option.

Most lenders will only consider a Short sale on your home when you are behind on your payments.  So, before you mess up your credit call your lender to see if this would be an option for you.

Qualifying for a Short Sale will require similiar documentation to doing a home loan mortgage modification program. You will need to assemble your financial documentation, a letter of hardship and other documents that your lender may require.

You should consult a profession in the field with knowledge of the short sale process.  You can find a Realtor in your area who may specialize in the the Short sale process by doing a Google search or contact your local Board of Realtors for a listing in your area.

Publisher- Michael Kench Uncategorized loan-modification-san-diego