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THE REASONS WHY LOAN MODIFICATIONS
ARE NOT BEING APPROVED
The relevant sections of HR 3221
(2) LACK OF CAPACITY TO PAY EXISTING MORTGAGE OR MORTGAGES - (A) BORROWER CERTIFICATION - '(i) The mortgagor shall provide a certification to the originator of the mortgage that the mortgagor - '(I) has not intentionally defaulted on the existing mortgage or mortgages; and '(ii) has not knowingly, or willfully and with actual knowledge furnished material information known to be false for the purpose of obtaining the existing mortgage or mortgages. '(ii) The mortgagor shall agree in writing that the mortgagor shall be liable to repay the FHA any direct financial benefit achieved from the reduction of indebtedness on the existing mortgage or mortgages on the residence refinanced under this section derived from misrepresentations made in the certifications and documentation required under this sub-paragraph, subject to the discretion of the Oversight Board.
(B) CURRENT BORROWER DEBT-TO-INCOME RATIO- As of March 1, 2008, the mortgagor shall have had a ratio of mortgage debt to income, taking into consideration all existing mortgages at such time, greater than 35 percent.
(C) LOSS MITIGATION RESPONSIBILITIES - This section may not be construed to alter or in any way affect the responsibilities of any party (including the mortgage servicer) to engage in any or all loan modification or other loss mitigation strategies to maximize value to investors as established by any applicable contract.
(3) ELIGIBILITY OF MORTGAGES BY DATE OF ORIGINATION- The existing senior mortgage shall have been originated on or before December 31, 2007.
(4) MAXIMUM LOAN-TO-VALUE RATIO FOR NEW LOANS- The mortgagee being insured under this section shall involve a principal obligation (including such initial service charges, appraisal, inspection, and other fees as the Secretary shall approve and including the mortgage insurance premium paid pursuant to subsection (e)(1)) in an amount not to exceed 90 percent AMT limit of the current appraised value of the property. Section 203(d) shall not apply to mortgages insured under this section.
What is a Loan Modification?
The HUD web site defines Loan Modification as follows:
"A Loan Modification is a permanent change in one or more of the terms of a mortgagor's loan, allows the loan to be reinstated, and results in a payment the mortgagor can afford."
Loan Modification is an effective process in loan mitigation to avoid foreclosure. In this process the loan terms are modified which are to be followed by both the lender and the borrower. Forbearance agreement is often confused with a loan modification agreement. However, the main difference is that a forbearance agreement is short-term relief while a loan modification is long-term.
The most common ways of modifying a loan are:
Generally if the borrower needs to have a creditable reason to qualify for loan modification, for example prolong financial hardship, sudden illness, unpredictable financial mishap etc. Normally, the loan modification process is carried out by a professional who generally works as a liaison between the lender and the borrower, presenting the borrower's case in a good light to reach a favorable agreement.
There are several sources that specialize in loan modification. There are often loan modification agencies that buy out the loan from lenders and then settle with a favorable agreement with the borrower. Arrangements depend strictly on the policies of agencies offering such services. For loan modification, the mortgagee must perform a retroactive escrow.
What does the $700 Billion Mortgage Lender Bailout mean to you?
Lenders are insured under the bailout plan for damages that have resulted in over appraisal, sub-prime loans, equity stripping, putting citizens in sub-prime loans when they should have been put in a prime loan, unjust enrichment, fraud and violations of the disclosure requirements. Congress has allocated $300 billion of that money to force lenders in renegotiating your loan at present market values, reducing your principal and interest extending the loan terms and getting you in a payment plan you can meet.
What We Do:
We audit loans for disclosure violations, fraud and unjust enrichment. We then determine the damages and put it all in a detailed document to use as leverage against your lender to force them into negotiating new terms of your loan and supply you with a letter to your lender to get the process started.
We are now offering a Loan Modification Package. Please see our Program Fees page.
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