FreeDIYkits Loan Modification Blog

Under new law banks compelled to work with homeowners in trouble and create California loan nodification Agreements. The California Foreclosure Prevention Act states that banks have to try and modifiy loan before foreclosure.

“Finally there is good news for California homeowners and help them avoid foreclosure. The new
The California Foreclosure Prevention Act, signed by Gov. Schwarzenegger in February, adds 90-days between the time a homeowner defaults on a loan and when banks can initiate foreclosure proceedings,” states Art Franklin, V.P. AboutCaliforniaLoanModification.com.

AboutCaliforniaLoanModification.com attorneys help homeowner obtain loan modification agreements. These agreements make monthly mortgage payments more affordable.

Assemblyman Ted Lieu, D-Torrance, who wrote the bill states “The goal is to compel banks to do systematic California loan modifications that will reduce the foreclosure rate. California has the highest foreclosure rate in the nation. Until we slow that down, the state’s economy cannot recover.”

Americans’ mortgage woes continued to get worse in the third quarter. Just 87.2% of U.S. mortgages were current in the third quarter, a decrease of 1.5% from the previous quarter, according to the OCC and OTS Mortgage Metrics Report released Monday. The Office of the Comptroller of the Currency and the Office of Thrift Supervision report covers 34 million loans totaling $6 trillion in principal balances, about 65% of the U.S. mortgage market.

Serious delinquencies jumped to 6.2% of mortgage-servicing portfolios, an increase of 16.7% from the previous quarter. The number of prime borrowers in trouble continues to mount as 3.6% of prime mortgages were more than two months behind on payments, more than double the number in default a year ago.

Foreclosures in process reached 3.2%, an increase of 9.4%, with more than 1 million foreclosures in process.

Loan Modification Efforts Improving

Yet on the bright side, more people are getting help with home loan modifications. National banks and thrifts implemented more than 680,000 home loan modifications and payment plans in the third quarter of 2009. That’s up 67% from the second quarter, so it appears lenders have finally gotten their act together to help people in trouble with their mortgages.

Q: I like your advice, and you seem to have a lot of it regarding the current loan modification program. I have applied for a loan modification, but I’m in the waiting period.

However, since mortgage servicers receive $1,000 for every loan modification request they put in, does it really make sense for them to process the request and then sell the loan to someone else?

It would be really shady for this to be happening, but I’m starting to think that is the current game. Is this what’s going on?

A: A senior official from the Treasury Department tells me that lenders do not receive $1,000 just for requesting a loan modification or submitting an application. I’m not sure where this rumor started, but it is certainly making the rounds.