Yes, delinquency rates exclude home loans already in foreclosure. At the fourth quarter’s end, that figure stood at 1.5 million home mortgage loans which is about 3.30 % of all mortgages on the market.  “Foreclosure inventory jumped sharply in the fourth quarter, even though the rate at which home mortgages were entering foreclosure remained unchanged,” said the association’s chief economist, Jay Brinkmann.  He attributed that primarily to state and local moratoriums on foreclosure sales, as well as the November decision by Fannie Mae and Freddie Mac to halt such sales, loan servicers’ reluctance to proceed with evictions over the December holidays, and overburdened legal processes in some areas.

A flat foreclosure rate does not necessarily mean housing’s downturn has hit bottom. The survey showed that the percentage of loans 90 days past due increased in the fourth quarter, but that foreclosure actions on a large number did not occur as servicers tried to modify loans and deal with investors who own securities of which these mortgage loans are a part.   Because loan servicers have been unwilling to talk with homeowners who are not behind in their payments, Brinkmann said, some “borrowers are running their accounts 90 days delinquent in order to qualify for certain modifications.”

A provision of the Obama administration’s plan to help cut the delinquency rate allows borrowers who are current on their mortgages to negotiate with servicers about loan modification options.  Gibran Nicholas, chairman of the CMPS Institute, which certifies mortgage bankers and brokers, complained that the plan’s guidelines lack a maximum total-debt ratio.  For example, modification might reduce a borrower’s mortgage payment to the plan’s target 31% of monthly income, but his or her total overall debt load, including car loans and credit cards, could be 75%.  “If the borrower defaults on the loan modification, taxpayers are on the hook for more money,” Nicholas said.   Read the complete article> Mortgage Foreclosures Rise in 4th Quarter

The number of homeowners falling behind on their mortgages or already in foreclosure surged to record highs during the fourth quarter, according to industry data released yesterday.  About 7.88% of mortgage loans were delinquent during the quarter, according to the survey by the Mortgage Bankers Association, an industry group. It is up from 5.82 % during the same period a year earlier. Another 3.3 % were in the foreclosure process, up from 2.04% a year ago. Both figures set records. Taken together, they mean that more than 11% of home mortgages are now in some form of distress.

The trend highlights the challenge facing the Obama administration as it launches a foreclosure prevention program that will pay incentives to lenders to encourage them to lower homeowners’ payments to affordable levels. The administration aims to help up to 9 million homeowners either refinance mortgages or attain a loan modification that keeps them out of foreclosure.

The House is also expected to vote today on legislation to allow bankruptcy judges to modify the mortgages of struggling borrowers. The financial services industry has fought the legislation for years, but after the foreclosure crisis deepened and Democrats gained greater control in Congress, the legislation gained traction.   

Increasingly, homeowners are becoming delinquent after losing a job rather than because they are struggling with a risky loan, the Mortgage Bankers Association and analysts said. Falling home prices are exacerbating the problem, they said.  “The collapse in former bubble markets drove the first wave of delinquencies and foreclosures. Now, we’re experiencing a second, more powerful wave,” Mike Larson, a housing analyst with the Weiss Group, an economic research firm in Florida, said in a research note.

There is also a large backlog of homes that are seriously delinquent, meaning payments are 90 days or more late. That potentially swells the foreclosure inventory, according to the data. About 6.3% of mortgage loans were seriously delinquent during the fourth quarter, compared with 3.62% during the same period a year earlier.

The backlog is probably tied to foreclosure moratoriums throughout the country, the industry group said. Also, some areas have been overwhelmed by an increase in foreclosures and local governments have been unable to process foreclosures quickly. “Normally servicers would have initiated foreclosure actions on a significant portion of these loans but delayed doing so for a variety of reasons,” Jay Brinkmann, the group’s chief economist, said in a statement.

The hardest-hit states continue to be California, Florida and Nevada, but Louisiana, New York and Georgia have also seen sharp increases in delinquencies, indicating that the recession is spreading, the group said.  Delinquency rates in the Washington region are below the national average. In the District, 4.38% of loans included in the survey were seriously delinquent or in foreclosure during the fourth quarter, compared with 2.07% a year earlier. About 5.52% of home mortgages in Maryland were in similar trouble, compared with 2.54% a year earlier. The rate locally was lowest in Virginia, where 3.83 % of loans were either seriously delinquent or in foreclosure. That is up from 2.13% a year earlier.

The mortgage crisis has many homeowners becoming very anxious to get rid of a unaffordable mortgage due to a number of reasons. Some solutions for homeowners are to either refinance or get a loan modification from their bank or mortgage lender. Since home values have been decreasing some homeowners simply walked away or were unsuccessful in modifying their home loan. Here are some valuable steps to get you the desired results in your favor.

1. How do I determine if I am eligible for a home loan modification?

If you can show evidence to your lender or loan servicing company that you have experienced a financial hardship, such as an adjustable rate loan that is about to reset to a higher rate, plus you currently have the income to afford a lower loan payment if given the mortgage loan modification, you are eligible.

2. OK, what hardships are acceptable?

Although each hardship is determined separately, the lender will usually consider these to be honored: a death in family, loss of employment or less hours, relocation for work, medical problems (hospitalized, bills), divorce, separation. Homeowners will need to write a hardship letter to the lender explaining their overall circumstances to the bank.

3. Am I eligible for a loan modification if I owe more on my house that it is worth? This actually helps your case and should work in your favor, because a home value that is substantially less than the current market value will make the lender sway away from foreclosing as they could lose even more money approximately $30,000 per foreclosed home. So keeping you in your house and making payments may be the best solution for all parties involved.

4. I have contacted my lender but they will not discuss my situation until I am behind on my payments? Each mortgage lender has different policies for prioritizing their mortgage loan modifications. Most of the time homeowners who are confronting foreclosure are being assisted first. However, many lenders are starting to communicate with borrowers who will face adjustable rate loan increases in the near future

5. What about these mortgage modification companies claiming they provide me the best opportunity for a loan modification? The majority of loan modification companies are new companies to get in on the start of the loan modification boom. Since some homeowners are not comfortable dealing directly with their lender, or do not think they have sufficient knowledge to actually get the desired outcome; a loan modification company can represent you with an upfront fee. Although certain state laws prohibit them from receiving an upfront fee if you are 3 months behind and in some cases two months behind. Some of these companies are reputable and want to honestly help you but don’t have the experience or proper personnel to get it done. As a rule of thumb, do your research on the mortgage relief company before you agree to anything and make sure to learn about the loan workout process so you can be ready to have loan modified correctly with the proper company.

6. What is a legitimate loan modification company?

A legitimate loan modification company is one which has an attorney in the office, where your file is being processed by experienced paralegals, not a “loan processor who is beginning a new career path”. Also, you should be speaking with a knowledgeable bank debt negotiator or they at least have one on their roster. More importantly, use a company that performs a forensic analysis on your loan file for Truth in Lending and RESPA violations. Companies like these have usually been around for years.

By: Adam Matheson Article Directory: http://www.articledashboard.com If you would like more information about loan modification options, visit: www.ocrealestatelawyer.net or for a New York Home Loan Modification; you’ll get a forensic analysis of lender errors so you are confident you will get a positive loan modification outcome.

Bob and Mary Keenan need mortgage relief quickly with a reduced payment. A series of reversals has left them strapped and incapable of paying all their bills, the largest of which is the loan on their newly built home.  Mortgage workout programs are all over the news and sound like nirvana to financially distressed homeowners like the Keenans. But they are often not as simple as they seem.

We will lead Bob and Mary through the mortgage modification gantlet. In the process, we’ll help illustrate who qualifies for mortgage help, what it consists of and how to boost your chance of qualifying.   As the mortgage marketplace has soured and left millions of American homeowners in or at risk of foreclosure, banks have launched increasingly aggressive programs to work with troubled borrowers. A group of banks represented by the Hope Now Alliance, for example, boasts that it has helped keep more than 2 million delinquent borrowers in their homes by changing the terms of their loans.  Read the complete article > written by Kathy Kristof.

FNM said that the Streamlined Modification Program (SMP) announced by the Federal Housing Finance Agency (FHFA) in November is now available to Fannie Mae servicers and borrowers as an option to help prevent foreclosures. Fannie Mae on December 12, 2008, provided information and guidelines to its servicers regarding the implementation of the SMP.  The SMP is designed to be a streamlined process for modifying the loans of a large number of borrowers who are delinquent in their mortgage payment and may be able to avoid a foreclosure through the program. As FHFA has indicated, SMP was intended to help set standards in the mortgage servicing industry for conducting loan modification programs on a large scale as a foreclosure prevention measure.

Fannie Mae has been working with FHFA and 27 mortgage lenders and servicers in the HOPE NOW alliance to implement the SMP. Under the program, borrowers who meet certain eligibility criteria and demonstrate financial hardship may be eligible for a mortgage rate modification that reduces their monthly principal and interest payment. The streamlined process allows a borrower to sign a single document at the outset of the workout process that both establishes a new monthly payment during a three-month trial period, and sets forth the modification terms that will take effect if the borrower makes the new payments during the trial period. The program is available to borrowers who have missed at least three monthly payments on their existing mortgage loans.  “By bringing the collective efforts of FHFA, Treasury, HOPE NOW, Fannie Mae, Freddie Mac and other mortgage industry participants together through the SMP to confront the foreclosure challenge, we’ll be able to help more families across America stay in their homes,” said Herb Allison, Fannie Mae president and CEO. “Along with other recently announced initiatives by Fannie Mae to reach and help financially troubled borrowers earlier, including our Early Workout program, the SMP is a critical component of our company’s foreclosure prevention efforts. These loan workout efforts are helping more than 10,000 delinquent borrowers every month get back on track.”

Loan Modification Options

Through the SMP, servicers may change the terms of a loan to reduce a borrower’s first lien monthly mortgage payment, including taxes, insurance and homeowners association payments, to an amount equal to 38 % of gross monthly income. The changes in terms may include one or more of the following:

– Adding the accrued interest, escrow advances and costs to the principal balance of the loan, if allowed by state law;

– Extending the length of the mortgage loan as appropriate;

– Reducing the mortgage loan interest rate in increments of 0.125 % to an interest rate that is not less than 3 %. If the new rate is to set below the market interest rate, after five years it will step up in annual increments to either the original loan interest rate or the market interest rate at the time of the modification, whichever is lower;

– Forbearing on a portion of the principal, which will require the borrower to make a balloon payment when the loan matures, is paid off, or is refinanced.

In a recent article written by Vikas Bajaj, he uncovers the concerning issue that distressed homeowners whose mortgage loan were recently modified are again delinquent on home loan payments, a top banking regulator said on Monday, raising questions about whether policy makers and mortgage lenders can successfully help them stay in their homes.

Data from the OCC indicated that more than half of mortgage loans modified during the first three months of the year were delinquent by thirty days just six months after the terms of the home loans were changed, John C. Dugan, the comptroller of the currency, said at a conference in Washington. After eight months, 58% were delinquent again.   The rate at which borrowers fall behind payments again — called the re-default rate — appears to be much higher than what previous studies have found. In October, a Credit Suisse study showed that about 30% of loans modified at the end of last year were delinquent by sixty days within eight months of the change.

Mr. Dugan said it was unclear why the default rates were so high after modifications made by the 14 banks that provided data to his office. He acknowledged that “we have to be careful as we look at this data.” One explanation for the high default rate might be that banks were not significantly changing the terms of the loans they modified. 

Analysts at Credit Suisse have found that modifications that do not lower borrowers’ monthly payments were more than two times as likely to be late again even after a loan modification was approved that lowered the mortgage payments. Banks like Chase, Citigroup and Bank of America have only recently put more emphasis on lowering monthly payments.

Some loans may also be so poorly underwritten that no mortgage note modification could help the borrowers stay in homes that they can no longer afford, Mr. Dugan said. That would confirm other studies that show homeowners who become delinquent are much more likely to lose their homes today than in the past.  The Mortgage Bankers Association said last week that 30% of homeowners who miss one payment end up in foreclosure a few months later. Historically, only 12 % to 15 % fell that far behind and most borrowers were able to catch up, sell their home or strike a better deal with their lender. In California, however, 75% of homeowners who miss one payment end up in foreclosure; in Florida, 65% who miss a payment do.  A sharp drop in home prices has made it much harder for homeowners to sell their properties for as much as they owe and rising unemployment is putting more borrowers in financial distress.

Severe delinquencies among mortgage holders increased more than 50 % from year-ago levels during the third quarter, according to data released Tuesday morning by credit reporting agency Trans Union LLC. At the end of Q3, 3.96 % of homeowners were 60+ days in arrears, compared to 2.56 % one year earlier; historically, the severe delinquency rate has held the line at roughly 2%.  No more. Not in the face of a housing and mortgage mess that, as of yet, shows little sign of slowing down. And with the nation’s recession already 1 year old — longer than the average length of most prior recessions — it might be time to ask if strategies employed thus far by government officials and lawmakers in the name of helping bolster the economy might be doing more harm than good.  “It’s nothing short of staggering,” Ezra Becker, principal consultant in Trans Union’s financial services group, told the Associated Press.  Staggering, perhaps. But certainly not surprising, given the recent mortgage news and the wealth of data we’ve already seen suggesting fundamental imbalances remaining in key housing markets nationwide.  Mortgage loan modifications are being approved by mortgage lenders quicker than traditional refinancing.The agency also said that severe delinquencies could reach as high as 4.7% before this year is out, an estimate that reflects the effect of job loss and an extended recession.

The culprit here shouldn’t surprise, if you’ve read HW for any meaningful period of time; a looming group of resets is staring down the mortgage market, many outside the subprime sector and many underwritten on 2 and 3-year timeframes. With an estimated 7.6 million U.S. households currently owing more on their home than it is worth, according to a recent study by First American CoreLogic, very few of these households will be able to refinance, even if incomes remain stable.  “There are a lot more loans that will be resetting throughout 2009 through 2011,” Becker told the Wall Street Journal. “There may be an ongoing flow of consumers who may now be able to pay their mortgage but may not be able to a year from now.”  Also not surprising is where those delinquencies are likely to be located — Florida, Nevada, California, and Arizona, to be more specific. All four states were among the most unsustainably overheated during the recent run-up in real estate prices; Trans Union said it now expects as many as 7.8% of homeowners in Florida to be delinquent by the end of this year, and another 7.7% of Nevada borrowers to find themselves in a similar position.  Read complete article  - Article written by Paul Jackson-

As more than 11 million mortgages approach foreclosure nationally, a parade of lenders - including Chase, Bank of America and Citicorp - are offering to work-out hundreds of thousands of mortgage loans to keep borrowers in their homes.   “Check such programs out carefully,” advises Charleston mortgage attorney Bren Pomponio. Consider all perspectives of loan modifications and refinance mortgages. “You want to know what the impact will be on your payment, your interest, the length of your loan and your principal.”  Some home loan programs may reduce monthly payments but actually increase your total debt, he said.   “Call your mortgage lender as soon as you know you’re in trouble,” he advises. “

Some companies may freeze or lower the interest rate or extend the loan term. That lowers the monthly payment, but may raise the total owed. Some offer payment-free months. A limited number will cut the principal.

  Hope Now is a coalition of dozens of FHA mortgage lenders and federal programs. They recently announced a new “loan workout” program to start Dec. 15.

  Hope for Homeowners, a HUD program, buys troubled mortgage loans, then adjusts the terms. The mortgage company must take at least a 3.5 % loss on the sale.

According to the California Department of Real Estate, real estate and mortgage brokers are allowed to modify mortgage loans as long as their services are fully completed before they are paid.  Loan Modification Outlet is an attorney backed mortgage relief service with partial refund options depending on how far along the individual is in the loan modification process to receive a refund.

• Carefully review the agreement and consider obtaining independent advice before signing it or advancing any fees.
• Compare the services and fees offered by other licensed brokers on the Department of Real Estate”s list.
• Do not pay anyone in advance if you have already received a Notice of Default from your mortgage lender.
• Check with local non-profits that help people modify their home loans without charging money upfront.  See More California DRE tips >

Read complete article at Loan Modifications Checklist for California DRE

These non-profit organizations offer assistance at no cost. If you are facing foreclosure and want to get more advice, give them a call. However, remember that most of these free services are overwhelmed with requests for mortgage relief and financial assistance.  If the free mortgage relief companies can’t help, do not be afraid to contact foreclosure lawyers or a loan modification company backed by attorneys. 

Ask all of these foreclosure prevention companies about home refinancing versus home loan modifications solutions.

• Project Sentinel: (408)720-9888, ext. 22 or go to its Web site: housing.org/contact_us.htm
• Home Foreclosure Advisors Call (888)  416-7092
• FHA home loans - Ask about FHASecure and Hope for Homeowners. 
• Neighborhood Housing Services: Call (408) 279-2600 for an appointment.
• Consumer Credit Counseling Service: Call (800) 540-2227 or go to its Web sites: gotdebt.org
• California Mortgage Loan Relief   or Call Call (888)  416-7093

See original article at Companies Offering Free Foreclosure Prevention Advice

Terry and Lloyd Berger live in their dream house in Marysville. Members of their extended family live nearby.  “I love Marysville,” said Terry Berger, 52. “I’m from here. I don’t want to move out of here.”  But they may have to move if things turn sour.  Like millions of others in this country, the Bergers are struggling to stay in their home. A subprime mortgage with a high interest rate they got a few years ago has choked their household budget. Their savings continue to dwindle, even though Lloyd Berger, 47, makes about $62,000 a year as a fleet mechanic for Frito Lay in Everett. The veteran also gets approximately $9,600 per year in early retirement payments from the Army.  The Bergers hope to get a home loan modification through a settlement with Washington and 10 other states reached in October by their lender, Countrywide Financial Corp. The nation’s biggest mortgage lender rose by selling risky loans and then fell when those loans turned bad and triggered the nation’s financial crisis.

The $8.4 billion settlement, the largest of its kind in history, aims to modify troubled mortgages for about 400,000 homeowners nationwide, according to the state Attorney General’s Office. The program is expected to be up and running on Monday.  The settlement showcases the increasing efforts of the government to reduce home foreclosures, which continue to bring down the housing market. Falling home prices have yet to see the bottom in Snohomish County and elsewhere in the nation, compounding the economic downturn.

The Bergers grit their teeth thinking about how they switched from a safe, thirty-year traditional mortgage loan to a higher-rate mortgage in 2006. It was fast and easy to get into the riskier loan, but getting out of it has been hard because of extra fees the Bergers said were not clearly explained.  They made their own mistakes, the Bergers said. But aggressive lending tactics by Countrywide pushed them into the quagmire, they added.  “I understand Countrywide was in business to make money,” Terry Berger said. “But when they use deceptive practices to make money, there’s a problem.”  Lloyd Berger moved around a lot while serving in the Army. Terry Berger followed him to Alaska, Louisiana and Texas.

When he retired in July 1997, she was ready to come back to Snohomish County. Her husband, originally from Stanwood, granted her wish.  The couple moved back and rented a place for a year before finding a two-story house for sale in Marysville. Lloyd Berger, who enjoys woodworking, loved the big shop in the back yard.  The couple got a thirty-year Veterans Affairs home loan from Countrywide with an interest rate fixed at 7 %. The $152,750 mortgage was a good deal with no closing costs, no mortgage insurance and no down payment.  They started paying about $1,300 per month for their house. The payment was reasonable because both of them held jobs.  But their debts would mount over time: credit cards, a student loan and an energy conservation loan.

In 2006, the Bergers decided to do a mortgage refinance with Countrywide to reduce their total monthly debt payments from about $2,700 to about $2,000.  “We had more going out than coming in at that point,” Lloyd Berger said.  The refinance came with a setback.  Countrywide told the couple that they could qualify only for a subprime mortgage with a fixed 8.375 % rate because of a bad credit score, the Bergers recalled.  As they negotiated by phone and e-mail, they struggled to keep up with their debt.  “We needed to get the refinance done, and they knew it and they got us in the corner,” Lloyd Berger said.  They didn’t shop around for lenders or check their credit score by themselves, they said, adding that they learned much later that their credit score was not bad.

In May 2006, they closed the deal while looking at a pile of paperwork at a coffee shop inside a Lynnwood book store.  “We never met a live body until we went to sign the paper,” Lloyd Berger said. “That wasn’t even somebody who worked for Countrywide. That was just a contractor.”  The new, $225,000 loan included a prepayment penalty for paying it off early. The penalty would expire a year into the loan, Terry Berger said she was told. She said she was also told it could be waived by negotiation.  She would find out otherwise later.

Terry Berger said Countrywide called her again and again after the home refinancing was done, urging her to switch to yet another mortgage. Some offers were for low, adjustable rate mortgages in which the interest rate is set to spike in a few years.  She refused all the offers. Another refinance would give Countrywide more money in closing costs and fees, but it would do her no good, she said.  Countrywide also kept calling her husband’s cell phone.  “I basically told them, ‘We are done with talking,’” Lloyd Berger said.  Why so many calls?  Because there was money to be made by the mortgage companies through extra fees and higher interest rates, said Glenn Crellin, director of the Washington Center for Real Estate Research at Washington State University in Pullman.  Crellin noted that the riskier, subprime mortgages were developed several years ago to give people a chance to buy a house when they couldn’t qualify for a traditional mortgages. “There was a lot of pressure from federal agencies to increase home ownership,” he said.

Investors loved mortgages when home values kept rising in America. The burgeoning global economy, especially spurred by China, generated a huge amount of money to invest, Crellin said.  U.S. financial firms such as Countrywide competed to issue and collect mortgages to sell them as securities to worldwide investors. The bigger the demand for mortgages, the looser the lending guidelines, said Steve Tytler, vice president of Best Mortgage in Bellevue and a real estate columnist for The Herald.  At the height of the housing boom, people were able to buy expensive houses without any income verification, he said.  “Bad guys abused the system,” he added.  Initially, the Bergers managed to keep up with their mortgage payment.

In March 2008, though, Terry Berger quit working as a paralegal for health reasons.  Tired of repeated calls from Countrywide, the couple tried to refinance their mortgage with Pentagon Federal Credit Union. They wanted to get another 30-year loan with a fixed 6 % rate to make it affordable on one income.

Countrywide said that they would have to pay about $6,000 in prepayment penalties, Terry Berger said.  The fee won’t expire until March — three years into the subprime mortgage, she learned. She had thought the penalty would go away after a year.  “What I heard from them was different from what appeared on paper,” she said.  The penalty kept the couple from switching to the credit union. Even without the loan, they had to pay $600 to the credit union for administrative fees that would have been waived had the new loan panned out.

If they don’t get help from the state with lower mortgage rates from a loan modification, they said they plan to wait for May 2009.  That’s when the prepayment penalty is expected to go away.  That’s when they plan to say goodbye to Countrywide.  Read complete news article >

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