What Is It?

Foreclosure is what happens when a bank repossesses your home due to mortgage payments not being made. Essentially, banks have the right to take possession of a property they aren’t being paid back for after having loaned the money. It is a public process that goes through the courts.

Foreclosure Numbers Soar

Since the housing market tanked, foreclosures have been seemingly out of control all over the country. With home values plummeting, unemployment sky-rocketing and and economy doing poorly, people have found it very difficult to pay off mortgages that once seemed reasonable.

What is Being Done?

Government initiatives such as the Making Home Affordable Plan are geared toward improving this situation and keeping homeowners from losing their homes.

Moratoriums have been issued on foreclosure activity to make sure the banks work in good faith to achieve any result possible before deciding on foreclosure.

Many homeowners are now able to stay in their home for months on end without getting foreclosed on as banks try to work through the mountainous piles of delinquent borrowers in need of financial assistance.

Will that happen this time around? Only time will tell. But with the current loan modification options, the odds are certainly stacked in our favor.

Many hard working Americans watched, almost helplessly, as their savings began to dwindle last year. Many were forced to cash in 401k plans meant for retirement while others dusted off their resumes after corporate cutbacks and found themselves pounding the pavement looking to start their careers and their savings accounts all over again.

But help came in a big way as the government stepped in with numerous loan modification programs to help the nation save their homes in the midst of this financial crisis.

Now that the biggest wave of company closures, layoffs, and cutbacks are over, let’s take a realistic look at what our options are for “getting back on track.”

Loan Modification – A Way to Save Your Home

With the help of a qualified loan modification counselor, you can turn a financial mess into a brand new start by 2010.

President Obama’s ambitious mortgage stimulus plan is geared toward Americans who are at risk of losing their home to mortgage default or foreclosure. How does this work?

1. Making Monthly Payments Affordable

The main goal of the stimulus program is based on adjusting mortgage payments to make them realistically affordable according to the homeowner’s current income. The fact that an individual’s home has lost value or that they are upside down becomes a secondary issue. The stimulus program is based on the acknowledgment of a financial crisis. Do we want a good portion of Americans to lose their homes? Absolutely not.

2. Keeping Monthly  Mortgage Payments Low

In order to standardize what an affordable monthly mortgage payment is, mortgage lenders who are helping homeowners are adjusting payments so they will not exceed 31% of a family’s gross monthly income. There are many ways to achieve this goal, which can include lowering interest rates, extending the length of the loan, and more.

For full details on requirements for your particular state, contact a qualified mortgage loan modification consultant for your area.

3. Cash Incentives

Banks and mortgage lenders participating in the programs to help homeowners receive money from the government for every homeowner they assist. These incentives continue for up to five years, as long as the homeowner is able to make their agreed payments. This incentive plan encourages banks to realistically assess the homeowner’s financial situation and do everything possible to ensure that the rates and mortgage modification plan is feasible.

These cash incentives are not limited to the lender. The homeowner will also receive up to $1000 each year (for up to five years) for making their payments on time.

With all of these plans in place, it is very likely that one of them is right for your current situation. The sooner you call a mortgage modification consultant, the sooner you can have the stress of losing your home off of your plate and move on to a new year and a new beginning. Regardless of your level of financial hardship, call today, and begin your journey to recession recovery. You may come out even better than you were in the first place.

Are you doing anything to secure the future of your home?

Obviously, no one wants to be apart of the six million homeowners that may face foreclosure, but are you doing anything about it? The government has set up the Home Affordable Modification Program to help, but only 12% of homeowners eligible for the government’s loan modification assistance program have actually had their mortgages reworked.

This means there is a lot of government money on the table right now dedicated to modifying loans that hasn’t been used. Millions of people can still qualify for lower monthly payments.

The simple truth, though, is most homeowners need help to get a modification. So many people unsuccessfully try it on their own and then end up contacting a company for help. The lenders can make the process overly confusing and it becomes very easy to make critical mistakes that ultimately get you declined.

Now? Unemployment is showing its ugly face and it could have a huge say in the housing market’s ability to turn around.

The article also mentions that traditionally, foreclosure comes at the end of a downturn as a result of rising unemployment levels. In this case, housing problems were the cause, not the result and while unemployment has been an issue for foreclosure levels, the full effects of it are only starting to be felt.

People that have been paying their mortgage on time for years are getting caught up in the mess as they are having to sustain their lifestyles despite prolonged periods of unemployment.

More Adjusting Loans on the Way

Unemployment isn’t the only thing threatening to bring more foreclosures. According to an article in the Bradenton Herald, there are an estimated 2.8 million option adjustable-rate mortgages scheduled to reset in coming years with the peak occurring in mid-2011.

This is going to cause the same problems we started with. Payments balloon and homeowners can no longer afford to stay current on their loan. Put that with the unemployment issues and its downright scary.

The impending adjustment of dangerous option ARMs isn’t new to the analysts watching this, but there isn’t really anything in place to stop it other than loan modification options for homeowners. There will be increased pressure on the servicing companies and government alike to improve the opportunity for homeowners obtain a workout agreement. The status quo will not hold.

With another round of government intervention in the mortgage industry and foreclosure crisis, it is fitting to remember what the last round brought us. Not a lot unfortunately. Many homeowners facing the uncertainty of foreclosure have turned to private professionals to intervene.

There are a number of success stories for third party mitigation companies to be proud of.  Success for these businesses means someone gets to stay in their home. There is a reason why so many people refer to their house as their ‘home.’

Just one recent example of a success story was this one:

A homeowner with an Indymac loan was straddled with a $2940.00 monthly mortgage payment. Although their existing interest rate was a reasonable 6%, the payment was putting them in jeopardy of losing their home.

This is how it can work

With third party intervention, the result was a payment reduced to $2120.62 representing an $820 monthly savings. The negotiation resulted in a re-amortized term of 40 years with an interest rate of just 3%. The total savings over the life of the loan; $393,600.00. Best of all, the renegotiated loan allows for paying down the principal, which wasn’t happening with the original loan.

Loan modification can help make a bad situation bearable. As a matter of fact, it can turn around the inevitability of foreclosure and save a homeowner from losing their home.

Experienced loss-mitigation experts can intervene on behalf of homeowners to negotiate a more manageable loan payment. There are other success stories listed on this blog.

Negotiators can either work to keep a homeowner in their home or help to preserve credit when a homeowner decides to take the short sale route. Any time these goals are achieved, it is a good day.

Example of a Success Case with the Making Home Affordable Plan

The client started with a monthly payment of $2724.43 per month. After a successful negotiation with Countrywide/B of A, the homeowner’s monthly payment dropped to $1931.61, A SAVINGS OF $810.82. We say it all the time, but this is literally the difference between ultimately getting foreclosed on and keeping your home.

In an article published at cnn.com, it’s stated that the crisis will get worse before it gets better, especially in Florida and California.

The news isn’t surprising, but certainly continues to highlight the need for homeowners to find resolutions that avoid foreclosure.