FreeDIYkits Loan Modification Blog

The Obama Loan Modification or Homeowner Affordability and Stability Plan offers protection and hope to billions of homeowners. Before you apply for a mortgage modification make sure you understand what protection is offered.

Full Disclosure:
When either just describing or encouraging loan modification, the servicer shall give the debtor information that will aid them in understanding the terms of the modification and the process of modification, and debtors should also be given written information about the costs, terms, and risks of modification that is clear and concise. This should be given in a timely manner as to allow debtors to make an informed decision.

Fair Lending:
Modifications under the plan must abide by the Equal Credit Opportunity Act and the Fair Housing Act, both of which do not allow discrimination on a prohibited basis connecting to mortgage transactions. Loan modification plans are subject to fair lending laws, and both servicers and lenders should make sure debtors are being treated equally when it comes to mortgage modification.

Consumer Complaints and Questions:
Servicers should have a system to answer complaints and questions regarding loan modification timely and appropriately, and that every question and complaint is taken seriously and answered appropriately.
This protection will ensure that you and your family are not treated unfairly and can receive the full benefits a mortgage modification.

Reeling from the recession’s one-two-three-punch of job woes, climbing mortgage payments, and evaporating equity, desperate Silicon Valley homeowners are dipping into a nearby income stream to avoid foreclosure:
That bedroom just down the hall.

While renting out a room has been around for years, especially in the South Bay’s Latino neighborhoods, sharing a home in order to save it has become an increasingly popular way to hang on to the front-door keys to the American dream.
“I’m up against a wall and I had no other place to turn for income,” said Rafael Porras, a 50-year-old waiter who began renting out a room in his downtown San Jose condo this month after he was squeezed by pay cuts at work and a mortgage payment about to rise. “But I had to do it because I don’t want to walk away from this place. ”

Whether they’ve rented out rooms in the past to make ends meet, or a job loss has prompted them to tap into their inner landlord for the first time, many people say their rental income is the only thing keeping them from losing their homes. And for many homeowners — even those whose property is worth less than their loan amount — losing their home is not an acceptable option.

“I can’t imagine life anywhere else,” said 71-year-old Margaret Licon, who bought her San Jose house 40 years ago and raised six kids in it before losing her husband 25 years ago. With no job, dwindling savings, and rising loan payments, Liconnow relies on a houseful of renters to stay afloat — a couple with three kids, an ex-Marine with health problems, and two grandsons shoe-horned into the garage.
“Without my tenants, I couldn’t make it,” said Licon, who’s hoping her lender will modify her $400,000 loan. “But I’ve been here so long, this house is a part of me. I’d even move into my garage and rent out my own bedroom if it meant keeping my home.”

While it’s hard to know precisely how many struggling homeowners have turned to renting out rooms, housing advocates have seen a surge in the past year in the number of people desperate enough to give it a try. Especially among the recently unemployed, rental income — along with family loans — has become a godsend.
“Renting out bedrooms is a growing trend,” says Sunnyvale housing counselor Maritza Wong, who works for the nonprofit Project Sentinel. “And it’s not just lower-income people doing it, but even people who were making good money before losing their jobs.”

At Project Sentinel, where staffers report as many as 20 percent of their clients becoming landlords under their own roof, counselors are recommending the practice as a way for homeowners to tweak their debt-to-income ratio in order to qualify for a modification.

They gathered to say goodbye at the bucolic Redwood City retreat Mrs. Bagnarol had created — a compound of three homes cascading down a steep hillside where she raised chickens. Some of her children and grandchildren live on the grounds.

But that night an unwanted visitor arrived: a process server delivered papers that ordered Mrs. Bagnarol and her family to get out. The bank had foreclosed on their property, and they were all being evicted.

Emotions exploded. Not now, the family cursed. A sheriff’s deputy was called to keep the peace. Mrs. Bagnarol died a day later.

But the unfortunate timing of the official visit was not the only source of the anger. More troubling were the financial deals that led to the visit — and the decision by lenders to sign Mrs. Bagnarol up for one exotic mortgage after another.

“It’s definitely elder abuse,” said Carolina Bagnarol, her daughter. “There’s predatory lending here.”

Ms. Bagnarol has filed a lawsuit against a lengthy list of lenders she said took advantage of her mother. The loans plunged her mother deeper into debt with each mortgage payment, to the point of financial ruin. The lawsuit contends that Mrs. Bagnarol was pursued and persuaded — twice over — to take out ultimately disastrous loans on the family’s property.

In recent years, 70 percent of the elderly have been solicited to take out new mortgages, according to a survey by AARP.

“Older people seem to be targeted in part because they own their houses and have owned them for a long time and have equity in their houses,” said Jean Constantine-Davis, senior lawyer for the AARP Foundation.

Mrs. Bagnarol was in her late 70s and suffered from the onset of dementia when she signed the loans, family members said.

“This is one of the most egregious cases I’ve ever seen,” said Michael Rooney, the San Francisco lawyer representing the family in the lawsuit. “The terms were so horrible — negative amortization and adjustable rate — no one would believe this loan was good for her.”

TAMPA – Attorneys and others are scrambling to become mediators following Monday’s Supreme Court order requiring foreclosure mediation for some troubled homeowners.

“There’s a lot of interest in this program,” said Rod Petrey, president of the Tallahassee-based Collins Center for Public Policy, a nonprofit group that trains mediators and assigns them to cases. “We have a roster of hundreds of mediators, and they’re all hungry for more work.”

Chief Justice Peggy Quince issued the order to help handle Florida’s glut of foreclosures. With an estimated 465,000 cases clogging the court system, mediation may help resolve some cases early in the process.

The order applies to new foreclosure lawsuits and requires that homeowners of primary residences be given the opportunity to have their case go to mediation with a third-party. The goal is to work something out between the homeowner and the lender in order to avoid foreclosure.

Choosing a mediator will be up to a judge, although the borrower and lender can request one. Judges typically work with nonprofits, such as the Collins Center, to assign mediators to cases.

Going through the home loan modification process is something that can greatly help you lower your monthly mortgage payment and avoid foreclosure. One of the companies that has done a good job of getting borrowers into a trial period for mortgage modifications is CitiMortgage. At the present time CitiMorgage has approximately 40% of the qualifying mortgages in the trial period.

If you are finding it very difficult to make ends meet financially and you can not make your monthly mortgage payment that a home loan modification might be right for you. Make sure to access the making home affordable website to find out much more information. There is quite a bit of information on this website so make sure to devote a significant amount of time.

There are several mortgage lenders that are having great difficulty getting home loans into modification. You will have to be very persistent with your lender and make sure you have all your documentation available and ready. One of the reasons the borrowers are finding it difficult to get mortgages modified is that they are not providing the proper documentation at the proper time.

If you’ve fallen behind with your mortgage and facing foreclosure, don’t panic and do nothing. It isn’t the time for in-action because with guidance, you may have options. Here’s what you need to know if you want to save your home from foreclosure.

The Federal National Mortgage Association — better known by its nickname Fannie Mae — recently announced a new tool intended to keep people facing foreclosure in their homes. Fannie Mae calls this program Deed-for-Lease, and it is sufficiently proud of the program that it claims a trademark on the name.

The first wave of foreclosures in Northern Colorado struck people who were in bad mortgage products: subprime mortgages and adjustable-rate loans that buyers couldn’t pay even if they still had jobs.

With the present economic downturn costing many hard working people their jobs the reality that the housing market crisis could be around for a long time is setting in. Job loss can be the preliminary event in a sequence that leads to foreclosure