The Truth About Mortgage Modifications - It's True - You Can Reduce Your Monthly Payments

The public has been told that the Obama administration’s modification programs have been designed to help the overall economy by resolving the mortgage crisis. The Big Myth is that these programs are readily and easily accessible to everyone, and that homeowners must be delinquent in their payments to qualify. In reality, you can qualify without being delinquent. But most Americans still find it tough to talk to lenders unless they are delinquent.

What’s the solution?

A time-saving solution – File Reviews, an innovative service that give attorneys and individuals fully documented files within a few short weeks.

The public, has been told that everyone with a mortgage is entitled to go to their lender and apply for a modification and that they will help for free. They have gone public on TV stating that they’re ready and willing to help in a timely fashion. Unfortunately, this is the myth.

The first question most lenders ask their customers who apply for a modification: “Are you delinquent?” Most will not even consider a modification unless the customer is delinquent. They will basically try to put their clients in delinquent or foreclosure status first so that they have all the leverage when negotiating. If the mortgagor is current with payments, the “modification” is not a priority for the lender.

The Home Affordable Modification Program Supplemental Directive 09-01 states in HAMP Eligibility on page 2:

“The mortgage loan is delinquent or default is reasonably foreseeable; loans currently in foreclosure are eligible. This means if you have ‘foreseeable’ hardship, be it a decrease in income or added expense, such as a new baby, you may be eligible for the modification.

See the HAMP Hardship Affidavit, Fannie Mae Form 1021 – August 2009 for a list of possible hardships

The horror stories I have heard, when applying for modifications consist of: Spending hours on the phone, on hold most of the time. When they were lucky to talk to someone, it was a different person every time; not always having access to the existing files and the customer had to start over again, wasting precious time. Then they were unofficially told (although no lenders will ever admit this) that they must be delinquent before the bank will talk to them.

Thinking they needed to be delinquent to even apply for a modification, these people stopped paying their mortgage for several months. Then they received a letter, starting the foreclosure process. It wasn’t until this point that the lender would talk to them about their file. Now that the lender had them just where they wanted them- a ruined credit rating and foreclosure status on their mortgage; they strong armed these unsuspecting individuals into accepting whatever terms they wanted to give them.

Did you know lenders are not required to tell their customers the maximum amount that they actually qualify for? They are only required to tell the customer how much they are being subsidized. For example if the bank suggests a $500 modification is available, it is likely that the client has been approved for much more, in some cases doubling this amount. It is the job of the mortgagor and/or their Attorney to negotiate with the lender in order to get the maximum modification they qualify for. Remember, all lenders are trying to make a profit and so the less they give the more money they keep.

Some elected government officials and State Representatives are now getting on the band wagon to help their constituents deal with these lenders.

Individuals do have the right to negotiate, although having an Attorney in your corner in my opinion is always better when negotiating. An Attorney may also be able to remove delinquent payments, interest and fees, thereby saving the individual huge amounts of time and money.

In order to process a Government Subsidized Modification, lenders are required to use a “Certified” Net Present Value Test (NPV Test) to calculate a modification. This test calculates how much the lenders will profit or lose if they a) modify a mortgage or b) foreclose on the property. It also figures out how much of a government subsidy the bank is entitled to, in addition to how much the lender’s portion should be added to the monthly reduction (a closely guarded secret that’s usually extracted from the bank only with a court’s subpoena). After all, this is where the lender’s profit margin lies when they negotiate for the final reduction figure and this information is carefully guarded. In turn a Failed NPV test calculates the bottom dollar figure the lender will consider for a Short Sale.

But, there is good news for everyone! There is a place where Attorneys and individuals can turn to for help. File Reviews at: [http://www.filereviews.com].

Lenders take three to nine months to get this information to mortgagors, and Attorneys, File Reviews takes 3-4 weeks, a definite improvement.

File Reviews has “Certified” people on staff, thus allowing Attorneys and individuals access to the same “Certified” NPV spreadsheets and federal data feeds, calculating the same NPV test that the lenders do, in advance. Showing a client their maximum reduction figure allowed, before they start negotiating.

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The Truth About Mortgage Modifications – It’s True – You Can Reduce Your Monthly Payments

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