Thursday, January 8, 2009

Mortgage silver lining or clouds prolonging the thunderstorm?

I know this may be *yesterday's* news in some circles, because I just got caught up on some interesting news released by Fannie Mae, the end of December.
I couldn't be more cautiously thrilled to hear that remodifications on home loans will no longer be just for people who go into default.

I'd heard rumors of this change about 6 months ago. I, however, have been so swamped with trying to tweak my business plans, establish cash flow for beta testing, and learning about how to brand myself, that I haven't stayed as up-to-the minute as was before.
According to the Washington Post article on Dec. 19th 2008, "Fannie's policy change has the potential to help thousands of people who are losing jobs or facing layoffs as the recession crunches onward. Most lenders and loan servicers traditionally have declined to intervene in mortgage problems until borrowers are 60 to 90 days late. At that point, so-called "loss mitigation" staffs may then try to work out solutions if possible –– through rescheduling of back payments, forbearance, extending the loan term, among other techniques.
For example, say your spouse loses a part-time source of income, and suddenly you're short $400 a month needed to make your $2,000 mortgage payment. In the past, if you called your loan servicer, you'd likely be told that long-standing rules prohibit any help to you until you have become delinquent by several months.

Under the new early workout concept, by contrast, Fannie's servicers can now tell you upfront: We'll try lowering your monthly payments to accommodate the $400 in missing income. If you're current on the lowered payments after a four-month trial, and your income situation has not rebounded, we'll make the change permanent."

Now many of you savvy, or proactive homeowners out there are already aware of these options, but please do your research before submitting to whatever your lender offers.

Fannie mae says they will still due their checks on credit, job etc.. to make sure no one is lying about a shortage of income.
I think this is biased, and actually they don't have any legal right to do that when it is for a remodification. If you decide to check with your current lender, make sure you then find a loan remodification specialist near you to see what kind of negotiations they come up with as well. A specialist works with lenders and sometimes a legal team directly, who can perform a forensic analysis on your property. This allows them to come up with a fair and current market value of your home, in some circumstances it can possibly lower your principle owed.. NOT just the interest rate. Remodification specialists will ALSO package your entire "remod" between your 1st & 2nd mortgage, saving you even more money, whereas your 1st mortgage lender will only deal with the loan you have with them. The entire goal is to make the payments affordable for you now and in the long term.

Just some key things to think about when you start pursuing this.

Check out to get a free look at your situation.

Now.. on to the flip side of this whole economic/mortgage mess. One has to wonder if these remodifications will really help stop the bleeding, or if it's just another tool to soak up the mess.

We all know that when you go into clean out a room/house etc.. it looks 10x worse while going through the process, in order to get to the end result. There are many aides in the current market, helping clean up, but are they just making it even more unorganized and ridiculous in the long run? Some statistics in the same article mentioned above claim that 53% of the people who have already gone through one remodification process in the last year, have already fallen behind or defaulted again. Of course that was bound to happen. These remod's aren't going to solve everything. I do like the fact that 47% have been helped... that is another 47% of homes that *were* kept from foreclosure... so in my humble opinion, that is progress. The bleeding did stop for that 47% so lets move on to the next section to clean until we can stand back and start seeing something take shape here in the grand scheme of things.

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