South Lake Tahoe, CA (PRWEB) February 6, 2009
Leadsnet Inc., has reported that lenders are stepping up their efforts to modify loans by offering principle reductions, interest rate reductions and forgiveness of back payments. Government and business leaders are calling for increased loan modifications and banks are responding. Wells Fargo, Bank of America, Citigroup and government agencies including the FDIC, Federal Reserve, Fannie Mae and Freddie Mac have all introduced a myriad of programs in response to the economic reality that over 5 million homes will be at some stage of the foreclosure process this year.
"Recent moves by lenders across the board has lead to increased modifications with favorable terms" says Ted Schmidt. President of Leadsnet Inc., http://www.loanmodificationleads.org a leading provider of loan modification leads. "Our customers are reporting that they have seen an increase in successful modifications in recent weeks." He also said that lead production has increased as a result of greater consumer awareness of loan modification programs. A loan modification "lead" is a consumer initiated request for a consultation. Leadsnet Inc. has over 12,000 consultants and loan officers with active registrations.
The Federal Reserve announced a new "Homeownership Preservation Policy" which is aimed at borrowers who are 60 days or more behind. This program is for loans that are owned by the Fed in its recent acquisitions of AIG and Bear Stearns. This program uses TARP funds which were released at the end of January.
Hope For Homeowners Loan Program
Congress created the HOPE for Homeowners (H4H) program to help those who are 90 days or more behind in payments, refinance into more affordable, long term loans. H4H is an new mortgage designed to keep troubled borrowers in their homes. It is not a loan modification. This program has been widely characterized as a failure. The main reason the program did not catch on is that no new lenders want to make loans to borrowers who have a history of not paying and property that is declining in value. Chairman Bernake in a recent speech acknowledged the programs shortcomings and called for changes.
FDIC Loan Modification
The FDIC announced a program late last year that promises to mitigate losses to the government and help people stay in their homes. This program includes cash incentives to loan servicing companies and government share in potential losses.
To qualify for the program you must have a loan that the FDIC administers and be at least 60 days behind in your mortgage payments before the end of 2009. This would apply to IndyMac Federal loans.
The FDIC will restructure your payments so that they are no more than 31% of your income. Interest rates can be set to 3% for 5 years. There is no principal reduction, rather the excess in the "affordable" loan balance and actual balance is added on to the loan at the end or when the home is sold.
Fannie Mae and Freddie Mac Loan Modification
The Fannie Mae and Freddie Mac program is for homeowners that are at least 90 days behind in their payments and owe at least 90% of the homes value.
With this plan, the government will allow you to have a lower interest rate and principal deferment. Debt ratio targets for this program is 38%. This means that your mortgage payment including tax and insurance can not be more than 38% of your income. You must live in the house and not be in bankruptcy.
Wells Fargo, said that they will be offering principle reduction in areas that have suffered the greatest market declines. With their recent acquisition of Wachovia, who made some of the most toxic "pick-a-payment and NINJA loans (No Income No Job No Assets) they join Bank of America who recently settled a multi-billion dollar law suit as a result of its purchase of Countrywide, who was the nations largest lender during the bubble years.
Consumers must be vigilant in negotiations with lenders. It is best to get third party representation from an attorney, CPA or licensed mortgage broker that can negotiate on your behalf. If you can not afford professional representation, there are many certified FHA community housing counselors that offer the service for free. Consumers can visit the Leadsnet inc. consumer portal at http://www.loanfix.us for a free loan modification consultation.