By: Crispin Lozano
Question: What is an FHA guaranteed loan?
Answer: The Federal Housing Administration (FHA) insures the loan secured through its list of approved lenders where borrowers can secure a mortgage for their home. Beforehand, FHA loans are not covered by the Making Home Affordable program of the government. Only loans secured by borrowers from the banks through Fannie Mae and Freddie Mac qualify under the Obama plan.
Question: What is the new loan modification program under the FHA?
Answer: The U. S. Secretary of Housing and Urban Development announced the FHA has implemented a change in its loan modification program to ensure consistency with the Obama Administration’s Making Home Affordable Modification program.
The program permanently reduces the family’s monthly mortgage payment through the use of partial claim, which defers the repayment of mortgage principal through interest-free subordinate mortgage that is not due until the first mortgage is paid off. This will be accomplished by bringing the mortgage current, buying down the loan up to 30% of the unpaid principal balance and deferring this amount in a partial claim.
Question: What should borrowers with FHA guaranteed loan do to request modification?
Answer: Borrowers with FHA guaranteed loans should contact their lender and request loan modification. They may also contact a reputable attorney who do loan modification to negotiate with the lender.
Question: Can a homeowner apply for loan modification while in bankruptcy proceedings?
Answer: Yes. However, it is better to apply for loan modification before filing bankruptcy because you have a better chance of getting better terms in modifying your loan. Once you filed for bankruptcy you will need to pay whatever are the scheduled monthly payments on the mortgage during and after the bankruptcy proceedings. Only unsecured debts may be reduced or discharged in bankruptcy. Secured debts such as mortgage payments will have to be paid as scheduled or the lender will request the court to lift the automatic stay and foreclose your property.
Question: May a borrower request loan modification while in foreclosure?
Answer: Yes. A foreclosure process starts when you received a Notice of Default (NOD) registered with the county recorder’s office. It ends when the property is sold in a public auction at a Trustee Sale. Upon receipt of the NOD you should immediately contact an attorney to do a loan modification. It is important to do this immediately because the Loss Mitigation Department of the bank is very busy and it will take sometime before they finally look at your case. In the NOD you are given 90 days to come up with the payment for all missed payments. If you cannot come up with the payments within 90 days, the lender will send you a Notice of Trustee Sale and will publish the property for sale at a public auction within the succeeding 20 days. After the 20 days of publication and no loan modification is agreed upon, the property will be sold to the highest bidder in a public auction.
If the loan is modified within 90 days or before date of the Trustee Sale, the lender will either forgive (write-off) or forbear (add to principal) the missed payments and will give you a lower monthly payments.
Whether to forgive or to forbear the missed payments is a matter of bank policy. My office received modifications that forgive the missed payments and modifications that add the missed payments to the principal. Many banks reduced interest rate to 4% over a period of five years while some lenders reduced interest rate to 4.5% over 30 years.
Note: This is not a legal advice. You need to talk to an attorney about your specific case. Our office offer FREE initial consultation on Loan Modification only.
Crispin Caday Lozano is an active member of the State Bar of California since 1999. He graduated Juris Doctor (Law Degree) from Western State University School of Law in Fullerton, California. He is a licensed Real Estate Broker #01297744 since October 2001. He is also a Certified Public Accountant and a Bachelor of Business Administration Cum Laude graduate. His offices are located at 17057 Bellflower Blvd. Suite 205, Bellflower, CA 90706 and 1290 B Street, Suite 205, Hayward, California 94541 and at 777 N. First St., Suite 333, San Jose, CA 95112. You can contact him at telephone (562) 461-1355 and (510) 538-7188.
Question: What is an FHA guaranteed loan?
Answer: The Federal Housing Administration (FHA) insures the loan secured through its list of approved lenders where borrowers can secure a mortgage for their home. Beforehand, FHA loans are not covered by the Making Home Affordable program of the government. Only loans secured by borrowers from the banks through Fannie Mae and Freddie Mac qualify under the Obama plan.
Question: What is the new loan modification program under the FHA?
Answer: The U. S. Secretary of Housing and Urban Development announced the FHA has implemented a change in its loan modification program to ensure consistency with the Obama Administration’s Making Home Affordable Modification program.
The program permanently reduces the family’s monthly mortgage payment through the use of partial claim, which defers the repayment of mortgage principal through interest-free subordinate mortgage that is not due until the first mortgage is paid off. This will be accomplished by bringing the mortgage current, buying down the loan up to 30% of the unpaid principal balance and deferring this amount in a partial claim.
Question: What should borrowers with FHA guaranteed loan do to request modification?
Answer: Borrowers with FHA guaranteed loans should contact their lender and request loan modification. They may also contact a reputable attorney who do loan modification to negotiate with the lender.
Question: Can a homeowner apply for loan modification while in bankruptcy proceedings?
Answer: Yes. However, it is better to apply for loan modification before filing bankruptcy because you have a better chance of getting better terms in modifying your loan. Once you filed for bankruptcy you will need to pay whatever are the scheduled monthly payments on the mortgage during and after the bankruptcy proceedings. Only unsecured debts may be reduced or discharged in bankruptcy. Secured debts such as mortgage payments will have to be paid as scheduled or the lender will request the court to lift the automatic stay and foreclose your property.
Question: May a borrower request loan modification while in foreclosure?
Answer: Yes. A foreclosure process starts when you received a Notice of Default (NOD) registered with the county recorder’s office. It ends when the property is sold in a public auction at a Trustee Sale. Upon receipt of the NOD you should immediately contact an attorney to do a loan modification. It is important to do this immediately because the Loss Mitigation Department of the bank is very busy and it will take sometime before they finally look at your case. In the NOD you are given 90 days to come up with the payment for all missed payments. If you cannot come up with the payments within 90 days, the lender will send you a Notice of Trustee Sale and will publish the property for sale at a public auction within the succeeding 20 days. After the 20 days of publication and no loan modification is agreed upon, the property will be sold to the highest bidder in a public auction.
If the loan is modified within 90 days or before date of the Trustee Sale, the lender will either forgive (write-off) or forbear (add to principal) the missed payments and will give you a lower monthly payments.
Whether to forgive or to forbear the missed payments is a matter of bank policy. My office received modifications that forgive the missed payments and modifications that add the missed payments to the principal. Many banks reduced interest rate to 4% over a period of five years while some lenders reduced interest rate to 4.5% over 30 years.
Note: This is not a legal advice. You need to talk to an attorney about your specific case. Our office offer FREE initial consultation on Loan Modification only.
Crispin Caday Lozano is an active member of the State Bar of California since 1999. He graduated Juris Doctor (Law Degree) from Western State University School of Law in Fullerton, California. He is a licensed Real Estate Broker #01297744 since October 2001. He is also a Certified Public Accountant and a Bachelor of Business Administration Cum Laude graduate. His offices are located at 17057 Bellflower Blvd. Suite 205, Bellflower, CA 90706 and 1290 B Street, Suite 205, Hayward, California 94541 and at 777 N. First St., Suite 333, San Jose, CA 95112. You can contact him at telephone (562) 461-1355 and (510) 538-7188.
Interesting!
ReplyDeleteThe loan modification process can be frustrating and confusing for many distressed homeowners. But you have to know what exactly is loan modification. A loan modification is a permanent change in one or more terms of a borrower's home loan.