Loan Modification, bankruptcy, debt settlement

Pitfalls of Loan Modification

January 23rd, 2009 Posted in mortgage software
Jan, 23 2009
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The choice to modify a home mortgage is a decision that should not be taken very lightly. Mortgage modification seems to be hot topic right now. The Federal Government has passed three pieces of legislation this year encouraging distressed homeowners to contact their mortgage companies and seek modification options.

The only problem is that when homeowners contact the company who they thought owned the mortgage, it turns out that the mortgage was rolled into stock or securities. This process is where an asset, like a mortgage, is pooled and packaged into a security and sold to investors. Simply put, your mortgage is owned by an investor, not the company that you pay your monthly payment to.

Once you begin the process you realize that there are many players in a mortgage transaction. You may have dealt with a loan originator, broker, attorney, document custodians, mortgage servicers and trustees. As if this wasn’t frustrating enough, now you find out that the servicer doesn’t own or hold the promissory note and mortgage on your home. So, who is the real party that you can call to modify your home loan?

Normally, in the mortgage modification process, you would start with the company that you make your payments to. This company could be a mortgage servicer or a mortgage company holding and servicing its own loans. I would ask them immediately if they own and hold the note and mortgage. If the company is a servicer, request that everything they tell you be put into writing. If they will not put their words into writing, I would highly suggest that you put their words into writing and send them back to them via U.S. Mail or ask their permission to record the phone conversation so you don’t mistake their advice. Why would you want to do this? Because the mortgage servicer makes more money when you default. This may not be true of all servicers but it is something you should be aware of.

Captaloans provides lead and loan pipeline tools for mortgage brokers and loan modification businesses.

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Mortgage rates will remain below 5% for the first half of this year

January 18th, 2009 Posted in mortgage software
Jan, 18 2009
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Mortgage rates will remain below 5% for the first half of this year which will help stabilize home sales and keep a refinancing wave going, according to a consensus forecast by banking economists. “A surge of refinancings is already under way and lower home prices and interest rates will gradually support an increase in home sales,” said Bruce Kasman, chief economist at JPMorgan Chase. Mr. Kasman is chairman of the American Bankers Association Economic Advisory Committee, which expects the government’s efforts to stabilize the financial system and stimulate the economy will lead to a recovery in the second half with gross domestic product rising to 3.8% in the fourth quarter of 2009. However, the bank economists see house prices continuing to fall and mortgage delinquencies rising throughout 2009. The refinancing wave will be “substantial,” predicted Mr. Kasman, noting that a high rate of applications may be rejected and cash-out refis will be modest.

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Examples of a loan modification hardship letter

January 15th, 2009 Posted in mortgage software
Jan, 15 2009
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One of the items your lender or servicer will ask for during the loan workout or loan modification process is a hardship letter. A hardship letter is a written explanation as to what “event” has caused you to fall behind on your mortgage and it vital in helping you stop foreclosure.

This letter acts much like an outline or biography of your current life issues that are affecting your ability to meet your financial obligations.

Please keep in mind that your are composing the hardship letter for your lender or servicer and because of the foreclosure crisis, they are extremely busy and back logged. So, with that in mind, do not write a book because most likely it will not get the attention of an over worked, $12 an hour loss mitigation employee. Keep it short and to the point. Usually 1 or at maximum 2 pages is more than enough to get your point across.

Here is an example list of hardships that lenders consider during the loan workout process:

Illness

Loss of Job

Reduced Income

Failed Business

Job Relocation

Death of Spouse or C0-Borrower

Death

Incarceration

Divorce

Marital Separation

Military Duty

Reduced Income

Medical Bills

Damage to Property (natural disaster or unnatural)

Other (Please Specify)

Below are some templates that you can use as a boiler plate for your own letter.  Remember that your hardship letter is only one piece of the loan workout process, but key in helping you avoid foreclosure.

Example Hardship Letter:

Name: (Your Name)

Address: (Your Address)

Lender Name: (Your Lender)

Loan #: (your Loan #)

To Whom It May Concern:

I am writing this letter to explain my unfortunate set of circumstances that have caused us to become delinquent on our mortgage. We have done everything in our power to stay current with our payments but unfortunately we have fallen short and would like you to consider working with us to modify our loan. Our number one goal is to keep our home and we would really appreciate the opportunity to do that.

The main reason that caused us to be late is (insert reason here and keep it brief) and this caused us to quickly fall behind.  Now, we are at the point where we cannot afford to pay what is owed to (lender). It is our full intention to pay what we owe, but at this time we have exhausted all of our income and resources so we are turning to you for help.

We truly hope that you will consider working with us and we are anxious to get this settled so we all can move on.

Sincerely and Respectfully,

Borrower’s Signature

Date

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Pipeline Management – Your tool to sales success

January 11th, 2009 Posted in mortgage software
Jan, 11 2009
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Mortgage professionals who are successful do so by understanding the health of their pipeline. Pipeline management allows management to more accurately forecast sales, better manage their time, and ultimately close more deals.  Every person in the organization wants a full pipeline that funnels from qualified leads at the top and feeds into converted customers and sales at the bottom. Have a healthy pipeline and a steady flow into your funnel and everybody in your organization can make lots of profit.

Without pipeline management you will get to experience a thrilling ride on the ROLLERCOASTER.  While the rollercoaster can be thrilling it can also be exhausting and is definitely not the best choice for a sales management strategy. We can only ride that rollercoaster so long before the thrill wears off.  That is where pipeline MANAGEMENT fits in.  But, what is Pipeline Management really?

Pipeline Management is a process by which you have a centrally managed system that allows you to monitor the deals you and your team have active and also track prospective leads you wish to convert into customers.  It is really a balancing act of making sure you have a steady stream of new customers but and also ensuring your existing customers are getting speedy service to get them through the pipeline.

Sales people generally hate reporting. In their mind its a waste of time and they’d rather be selling.  So while pipeline reporting and review is ESSENTIAL, it is important to help your sales teams by giving them tools that are easy to use and simple to understand.  Lets face it – if your sales team wont use the tool then it becomes worthless.  We have seen many high end CRM installations fail because the tools were too complex or took too long to learn.  After thousands of dollars to implement they slowly died off as people reverted back to Outlook or Excel.  If you are in the loan modification or mortgage business please do not invest heavily in a complicated system until you at least check out Captaloans.  We are THE low priced leader in the mortgage CRM space and we provide simple online tools for your agents to track their loans or loan mods online.  We also have simple online lead management tools to track the leads.

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Four strategies for refinancing in turbulent times

January 6th, 2009 Posted in mortgage software
Jan, 06 2009
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1. Have an idea of the value of your home
Call a real-estate agent or look at sites such as Zillow.com to get an estimate of what your home is worth. If you’re upside down the possibility of refinancing might end right there.  To get a better idea on a home’s value, borrowers might ask their mortgage firm if the appraiser it works with could give a ballpark estimate before starting the process. But that’s still just an estimate until an appraiser comes out we should point out.

2. Get ready for a thorough screening process
It’s not impossible to get a mortgage in today’s environment. But lending standards are a lot stricter than they were so expect a thorough discussion of your finances with a mortgage broker before the application is even filled out.  Lenders are asking borrowers to document income and assets thoroughly. In general, many also want FICO credit scores of 660 or above for conventional mortgages.  Those who might have a hard time getting a mortgage today are self-employed homeowners who don’t have two years of income documentation — even if they have the income to support the mortgage.  The availability of stated-income mortgages, which don’t require borrowers to fully document their income is a thing of the past boys.

3. Know what you’ll be saving
The old rule of thumb was that your rate should drop two percentage points for a refinance to be worth it, but that doesn’t always apply anymore. Borrowers also need to consider how long they want to stay in the property to determine which mortgage makes the most sense for their situation.  Sometimes you could be better off refinancing even if you don’t get a better rate.  If you have an adjustable-rate mortgage that resets in a year, but can get a fixed-rate mortgage at the same rate, it’s probably a good idea to refinance now if you plan on being in the home for a few years.

4. Don’t count on cashing out
Tapping home equity through a cash-out refinance is much more difficult these days, due to stringent credit standards and loan-to-value requirements.  According to Freddie Mac, the share of refinances with a cash-out component was 63% over the first three quarters of 2008, the lowest level since 2004. Cash-out refinance mortgages have loan amounts at least 5% higher than the paid-off mortgage balances.  The combination of declining home values and tighter underwriting standards have cut the amount of equity available to homeowners.  Nothing to do now but wait it out.

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