Investment Mortgage Guy

For the first time in history, most lenders are taking requests very seroiusly by their borrowers to have their loans modified. A loan modification is where the bank adjusts your rate and terms to something more favorable for you without having to do the tradional refinance.There are several factors that have caused banks to take a hard look at this. First, the average foreclosure costs about $58,000 for the bank to execute. If the bank has to do a loan modification that costs them $25,000 long-term and they rebuild loyalty with that customer, it’s just makes sense for the bank to look at it. Secondlly a lending instituition recieves a black mark on the books and has to keep a certain amount of reserves available for every foreclosure they have. This is a huge incentive to limit the number of foreclosures they keep in their porfolio. Finally the government and politcal opinion has shifted dramatically to helping people stay in their homes. An organization called Hope Now (1-888-995-4673 or WWW.HOPENOW.com) was formed to education people to contact their lender to re-negotiate terms that are affordable to them.

I have been a mortgage banker for 13 years and until 2 months ago, I have never seen banks willing to do this. In fact, a wholesale company that I brokered 28 loans though 2 years ago recently contacted me and asked me to call all my past clients and wants modify all 28 loans from the option arm product they have right now. They are worried that down the road the borrowers may not be able to pay.

So loan modifications are happening, who qualifies and how do you get it done effectively with your lender?

The first step is to contact your lender and request to speak with the loan modificatin department. Explain to them your reason for needing your loan modified.
All banks will require you to do the following:
1) Fill out a financial statement.
2) Provide your most recent tax return and W2
3) Provide a current pay stub
4) Provide a most recent asset statement.

Follow up step – Call them once per week until you hear something back. The squeaky wheel gets the grease. I recently had a client get both his option arms modified to a 5% rate – 5 year interest only loan. It took 3 months of diligence and phone calls, but it happened. He is thrilled!

Tip on Qualifiying- Every bank is going to have a slightly different qualification policy but in general to qualifiy for a loan moficiation, you want to show the bank you are able to make your payments but not have so much extra cashflow each month that they know you will never default. It’s a little bit of a cat and mouse game but lenders have come a long way to streamline the process.

There is hope out there is your feeling a pinch with your current mortgage terms. So intead of worrying about it every night, roll up your sleeves and get busy!

If this task just seems too daunting and you don’t want to take it on yourself, you can hire me to do it for you. I charge $1500 only upon successful modification.  THERE IS NO UP FRONT COST.

You can call me at 952-808-2820 or rbonahoom@houseloan.com