The Program
Fannie Mae and Freddie Mac will offer a simplified loan modification process. Beginning July 01, 2013, servicers will be required to offer borrowers who are at least 90 days, but not more than 24 months, delinquent on their mortgage a trial modification without requiring financial or hardship documentation.
If the homeowner makes three timely trial modification mortgage payments, their mortgage will be permanently modified. Additionally, homeowners who provide documentation of their finances and hardship could receive “a modification with additional savings.”
The Eligibility Requirements:
Our View
This appears to be a good initial program. This program has the potential to help many homeowners avoid foreclosure. While much remains to be seen, we do like the following aspects of the program:
- No documentation- Many of our clients get frustrated and exasperated by the constant requests to provide the same documents over and over again.
- No action required- Servicers will contact the homeowners directly. Homeowners will not have to hire a third-party to help them with the loan modification (equals more savings for the homeowner).
- Length of trial modification- Three months is a reasonable amount of time. We have seen some trial modification go on for 6 months or more (this can be very stressful for the homeowner).
- Investment properties are eligible.
Read the full press release here.
We are here to assist you! Call (516) 858-2620 to schedule an appointment with The Law Firm of Vaughn & Weber, PLLC.
I already modified my mortgage, but because of new circumstances I am late again. Must I Short Sale my home now?
Not necessarily.
You may be able to get another loan modification based on your “new circumstances.” The HAMP guidelines were recently changed to address this situation. Homeowners who have defaulted on a trial or permanent HAMP loan modification are now eligible for a new HAMP loan modification. Additionally, the bank can always offer you an in-house loan modification if they want to. You may have several other options you can explore before doing a short sale. One of your options may be a chapter 13 bankruptcy. We have developed several strategies to assist distressed homeowners. A Short Sale is never the first option! It may be a good idea to consult with an attorney before making a final decision.
Call (516) 858-2620 to discuss your options. The Law Firm of Vaughn & Weber is here to assist you!
Mortgages are “secured transactions.” Secured Transactions are, essentially, collateralized loans. In secured transactions, borrowers give lenders an interest in some property (collateral) that will cover the amount borrowed if the borrower defaults. When someone buys a car, for instance, the car can be repossessed by the lender if the borrower stops making payments. The car will, theoretically, cover the remaining amount of the loan. The collateral (the car) “secures” the transaction because it practically guarantees that the lender will get, at least, an amount equal to the value of the collateral in return for the loan.
When someone mortgages a home, the home serves as collateral for the amount of the loan. The note is the contract in which a borrower agrees to repay a loan. The mortgage is the contract that makes the real property collateral for the loan. The mortgage gives a lender the right to take the home if a borrower stops paying the debt, as agreed to in the note.
Foreclosure plaintiffs (banks or other lenders) must prove that they own both the note, and the mortgage. Plaintiffs that can’t prove that they own these two instruments will not win a foreclosure case. If the plaintiff is not the original party to the loan – which could happen if one bank or lender sells the loan obligation to another – then the plaintiff must show how it came to own the loan.
One would expect banks and lenders to keep documents as important as notes and mortgages safe and secure. Surprisingly, this is not always the case. During the housing boom, mortgages and notes changed hands so frequently and quickly that it was not uncommon for one or the other to get lost in the shuffle. Earlier this month, an attorney representing a homeowner in Queens won a foreclosure case because the bank couldn’t prove that it owned the mortgage and note.
Not all homeowners will be so lucky. But chain of title issues are definitely worth investigating. Foreclosure defendants should consult with experienced foreclosure attorneys in order to explore all options and defenses.
If you have questions about this or other legal issues, call The Law firm of Vaughn and Weber at 516-858-2620 today to schedule a free consultation. We are located in the heart of Long Island at 393 Jericho Turnpike, Suite 208, Mineola, NY 11501.
Shadow Inventory
The Wall Street Journal had a very interesting article written by Nick Timiraos (a link to the article is provided below) regarding shadow inventory. The article talks about interesting topics such as the decrease in the new homes being built and its effect on investor interest in REO (bank owned properties) properties. Freddie Mac analysts are citing the reduction in new home building as a reason why the once assumed over saturated “shadow inventory” is not smothering and hampering the housing recovery. If you are considering a foreclosed property as an investment and have questions, please call 516-858-2620 to speak to an attorney.
The Wall Street Journal – August 16, 2012
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