Federal Bailout  -  Plan B

Plan B now represents all loans being modified by Loan Modification specialists or Nevada Attorneys.  ( Read  - What You Really Need To Know About Loan Modifications).  This includes any and every kind of Loan. 

For borrowers who are behind in payments, have a lower credit score, have lost a job, 1st and 2nd loan, equity line of credit, heloc, pay option arm or have investor loans the only process for changing the loan amount and payment seems to be to challenge the mortgage documents.

You have to understand that the federal bailout monies does not involve bailing out individual borrowers but rather to bailing out lenders, mortgage servicers and banks that hold bad debt from foreclosed mortgages or in the case of what is going on now, it a bank/lender/servicer modifies a loan they may appeal to the feds to bail them out from lost money.

Most everyone in the real estate industry is fearful of repercussions from the bail out where the lender can foreclose on the property have an asset and then seek relief of bad debt.  In essence owing real estate free and clear.  As the market recovers they have 100% profit at owners and taxpayers expense.  We have seen this in Las Vegas where Countrywide Mortgage is offering to exchange investor properties that are in hardship positions for properties in other parts of the country.  I would assume that Countrywide believes in Las Vegas recovering sooner than other cities.

Realizing this may be viable scenario realtors, lenders and attorneys have been taking the task of challenging mortgage holders.  You have to realize that not all mortgage lenders hold mortgages.  Of the 1000's of mortgage companies in existence last year all loans were sold to about 2 dozen mortgage servicers.  Today 100's of mortgage companies still exist and maybe a dozen mortgage servicers.  So it's hard to point fingers at good guy and bad guys.

For investor borrowers there are very few avenues allowed under the current bail out program or from future reform in the next few months under either candidate regardless of who wins.  Investors are perceived as the piranhas that caused the mess.  While in actual facts without investor borrowers there would be a tremendous lack in housing.

For investor borrowers a challenge is the only way to modify a loan payment and loan value.

Most all Loan Modifications are now based on the premise that there never was and never will be a loan that is actually done right.  By right I mean meeting the legal requirements of contracts, fair housing and RESPA.  Every single borrower of every single home in America can remember signing papers that were filled out by the lender with misinformation on them and told not to worry about it.  In many cases where original signatures and stamps are required there are not originals.  I heard of a case yesterday were a family was being foreclosed on; an attorney requested a copy of the mortgage documents, loan applications and a copy of the deed.  The foreclosing lender had none of the documents.  Needless to say the home could not be foreclosed on and it will be interesting to see if the family has to make monthly payments.

For modifications of investor loans an audit is done on the paper work, the discrepancies are noted, a letter from an attorney is sent to the lender/mortgage servicer/holder pointing out the errors.  A request for loan modification under terms acceptable to the borrower is requested.  These terms are for a lowered loan amount in line with current value of the home, and a modified payment with a rate and payoff that is in line with normal...  30 year fixed, fully amortized, not crazy liborg adjustable pay option arms that so many buyers got STUCK with in 2005-2006.

When all these loan modifications began the cost of modifying  loans ran between $3,000 and $10,000 depending on how much iequity was being modified.  The cost currently ranges between $2,500 and $3,500.  There's lots of very loose rules and guidelines.  Each modification is different and special to that particular borrower the lender and the terms. 

• Can you be late on payments?  It's generally not preferred but yes in some cases it helps to be and the attorneys may instruct you to miss payments.
• How is valued determined?  A new appraisal but sometimes a broker's opinion of value.
• Can I make payments for services over time?  Yes each program allows for monthly retainers.
• What happens if they can't modify my loan?  The  success rate is very high, but the loan modification process is heavily regulated.  If any laon modifier is unable to acomplish the task they will give you a 100% back money guarantee.
• How long does it take?  About 60-120 days start to finish

Most important is to get started now.  Once the government gets involved and I can't imagine they won't.  They should have 14 months ago but haven't.  You know they will overbuild the model.

In case you don't know how the government works.  The first bailout in October 07 of $700 billion  included $70 million for Caribbean Rum and $20 million for tuna fishing in Samoa.

Don't wait, save your home and your investment. Act now.

Remember two things;

The only thing you have to lose is your home.

Why would you go to a mortgage company to modify your loan when they are the ones who got you in this mess to start with?