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Paul Luykx

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Walk away? - TARP recipients required to do loan mods - Situation assessment

04-13-09
Paul Luykx
"Walk away?"
Lenders will tell you to walk away from services like ours, calling us "scam artists" in the process. They don't want to fight with our attorneys over your loan modification. We are committed to (1) proof your hardship, and (2) get the maximum possible benefit. This could be your best "refinance" ever, creating a new financial beginning for you and your family. Leave it to the experts. Don't go it alone!.
Situation assessment
1. Lenders/servicers are swamped, but turn times continue to improve
2. Ineligible home owners are applying for loand mods Get pre-qualfied
3. Lenders are resisting loan mods by disputing hardship and inability to pay.
4. Non principal residence loan mods are just as likely to be granted
Homeowners trying for loan modifications they don't really deserve
There's anecdotal evidence that an increasing number of homeowners are trying to pull the wool over their lenders' eyes. In some cases, they are lying in an effort to save their homes from foreclosure. But in other instances, they are trying to convince lenders to grant them new, more favorable loans they don't really deserve. Read more
(We (pre-)qualify all our clients twice: at time of intake, and again once all documents have been received - P)

TARP recipients are required to modify loans, HUD says
Banks receiving federal aid through the U.S. Troubled Asset Relief Program must also take part in the government’s mortgage modification initiatives, Housing and Urban Development Secretary Shaun Donovan said. Read more

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MHAP - Loan mod calculator - Tax treatment of debt relief

03-09-09
Paul Luykx
The Obama plan now called the "Making Home Affordable Program" (MHAP) is good. Details. It has been said that it cuts the Gordian Knot. While it covers only a limited number of scenarios it establishes well-defined criteria for refinances for properties under water (to 105% for now), and loan modifications. - Paul
Report: Obama mortgage plan has some issues
The Obama administration's new mortgage modification plan is a positive step forward but questions remain about how the government will enforce new standards and what agency officials plan to do about problematic second mortgages, according to a congressional oversight panel report on Friday. Read more
Loan Modification Calculator
There are rules, common practices, and each lenders has unique policies. All of these change frequently, so the best we can do is estimate based on our experience and assessment of the current rules. Check your potential benefit with our Loan Mod Calculator.
The Mortgage Debt Relief Act
The Mortgage Forgiveness Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualify for this relief. This provision applies to debt forgiven in calendar years 2007 through 2012. Read more.
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How long does it take - Freddie/Fannie - Other debts - The LX difference

02-28-09
Paul Luykx
Getting a loan modification is fairly easy if you do exactly what lenders want you to do and if you are lucky enough to get processed and you get approved. It boils down to filling out forms, sending them in, and constant follow ups. That is all some loan mod services do also. Nothing wrong with it, but we do much more than that. Our service is attorney managed foreclosure prevention, and we're focused on a new financial beginning for our clients. If a loan mod is the best option we fight hard to get the very best modification, not just any loan modification. For further details go here.
Lenders are starting to pay attention to other debts
The re-default rate of loan modifications is high. Prime reasons are lenders offering as little as possible without even considering immediate ability to make the new payments. Other reasons are loan and credit card payments. Lenders are now more likely to agree to postponement of payments so that borrowers can catch up on these first.
How long does it take to get a loan modification?
It takes us about a week following receipt of all documents to evaluate the overall situation, identify the options, and then "build the case". The next part is contacting the lender, fine-tuning the submission, sending it in, and then negotiations follow. All of this took 3-4 weeks mid 2008. Nowadays it is more like 2-4 months (and worse), all due to volume delays on the lender side. The good part is that in the meanwhile it stops all foreclosure action (so far at least).
Fannie, Freddie should relax loan modification rules, FHFA says
Fannie Mae and Freddie Mac need to relax rules for a loan-modification program that promised to cut mortgage interest rates and lengthen terms for troubled borrowers, the chief economist for the companies’ regulator said. Fannie Mae and Freddie Mac have sent 90,000 letters to borrowers who have missed at least three payments, inviting them to participate in the so-called streamlined loan-modification program, since the plan was announced in November. Read more
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Homeowner Affordability and Stability Plan and loan modifications

02-19-09
Paul Luykx
The Homeowner Affordability and Stability Plan is by and large good news. Check whitehouse.gov for a summary. The devil is often in the details with newly announced initatives, and I will keep you posted as more specifics become known. The plan will help many, but not all - and lenders are incented to help, but they don't have to. Read more
The plan seeks to institute guidelines for loan modifications
Treasury will develop uniform guidance for loan modifications across the mortgage industry, working closely with the bank agencies and building on the FDIC’s pioneering work. The guidelines will be used for the Administration’s new foreclosure prevention plan. Moreover, all financial institutions receiving financial assistance under the plan will be required to implement loan modification plans consistent with Treasury guidance.
The plan is almost certain to improve modifications
The new plan creates an array of incentives that improves the math in favor of modification. Lenders will be paid to process modifications, so now they can allocate more staff to it, resulting in faster turnarounds. The government will also subsidize modifications, which will result in better loan modifications. At the end of the day though, mortgage modification will hinge on one basic calculation for the bank: Will we lose less money modifying the loan than foreclosing? After all, the last thing banks need right now is to lose more money. Read more
Not all modifications are the same, and not all fit under the plan
Modification eligibility under the plan is (or will be) defined - but the actual modification formula is not. Lenders are not required to include any loan under the plan, and each lender will have a unique approach to eligibility and what modifications will look like. Also some situations do not fit under the plan at all, including:
  • Second mortgages
  • Properties other than primary residence
  • Jumbo loans
  • Private label loans: non-FHA and non-GSE (Fannie, Freddie, VA, others) loans

How can LX Financial help?
Lenders will continue to have unique qualification criteria, and their own formulae for the modifications they are prepared to grant. We know how to present a case, how to negotiate, and how to get the best possible deal. the cost is less than a refinance and the "upside" can literally be in the 100's of thousands of dollars. Request a free review
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