if their first loan is below $729950 they may qualify for a hamp loan mod as well as getting help with a few months of payments.
California is considered the hardest hit and you may be able to get help for free if you are unemployed. I believe you get a few months of mortgage payments.
I know the word is out there not to pay for help however some home owners do not know what is a good offer and what to do when the lender will not help them.
making home affordable .gov is an exellent resource.
The loan modification formula is simple. 31% of annual wages of the borrower(s) is the lowest payment loan can be modified to by many lenders for 1st deed of trusts only. So as long as the home owners payment is above that they stand a chance based on hardship to lower their payment. Otherwise they keep on paying at current amount.
Now, if they do not have a job at all and there is no income, the modification is not possible either.
For short sales, make sure there is hardship otherwise short sale approval is tough.
Amit Inamdar, MBA, Broker
Home Loans and Sales under One Roof
CA DRE #01355522, NMLS # 236574
Own Sweet Home Realty
Actually, you can still do a modificaiton is you have equity.
example. Home owner has a first that is $729,000 and a second loan they are current and not upside down.
they do qualify for a mod because 1)
they live in the home
2) the first loan is below $729, 950
3) they obtained the loan before 1/1/09
4 their payment for the first loan principal interest taxes and insurance is more than 31% of their gross income. Equity doesnt have anything to do with it. Hardship does.
Being current is fine. You can still do a modificaiton on a 2nd home or rental home as well.
Lenders do want you to submit a workout package at least 10 days before the foreclosure sale date however you can submit one later than that your risking not getting looked at because I believe the lender is not required to stop the sale if you wait that long..
As far as paying someone to help with the loan modification, I have heard horror stories from every source, people who tried to do this themselves, people who used the government approved 'free' services (remember, you get what you pay for!), people who used attorneys who CLAIMED they knew how to work with the banks, and people who got scammed by so-called loss mitigation companies. But I have heard good stories as well, mostly from people who used a for profit loss mitigation company. In fact, the ONLY happy endings I have heard came from people who paid for the service.
There are no 'pat' answers. But I will say this, no matter who a homeowner uses to modify a loan, they need to keep a careful eye on them and track the deadlines themselves. The banks don't make it easy, for anyone!
If they are in one of those situations, then they will not qualify for a loan modification, and their available options are getting less and less, one of them is to do the short sale of their property and walk away with less damage to their personal credit and one debt less.
There are many available non-profit organizations doing loan modifications for free under the Obama guidelines, but according to consumers they take too much time to complete the negotiation with lenders, then they get frustrated. That is why, some homeowners decide to pay companies who specialize in processing loan modifications. I know one that is local and with excellent reputation, that I can direct your clients for a possible oan modification.
If the bank did not approve a loan modification, then they better do a short sale after they consult with their CPA, or tax attorney. Short sale is for a home owner on their primary residence and has to be in a financial hardship.
Department of Real Estate
DRE License # 01722870