May 2009 Newsletter

1. How does Loan Modification help the consumer?

Indeed many lenders are granting loan modification in order to help homeowner retain ownership. If you have a mortgage loan, you shall, in some ways, be able to modify. It is a great option to avoid foreclosure and maintain ownership of your property.
To many families the effect of foreclosure can be far reaching and even cause a complete disintegration of the family. The media have reported suicide cases linked to the effect of foreclosure. It is a reality that some lenders will reduce principal to facilitate a loan modification. Options Arms were originally designed to accommodate sophisticated borrowers and investors. The abuse of Options Arms by unscrupulous mortgage brokers and lenders catering to unrealistic borrowers created more chaos in the real-estate market.

For many homeowners, it is a win situation to have the possibility to re-amortize their loan to a longer 40 or 50 years having their owed obligation to the bank added to the principal so that their will retain ownership, afford their monthly payment, not disrupt their family dynamics and further aspire to salvage the American Dream of homeownership.

Many lenders, with the assistance of the stimulus plan, are awarding better and better loan modifications. We have assisted many of our clients in obtaining modification with terms as low as 1% interest payment for the term of the loan and reduction of principal owed.

It is now a proven truth that loan modification is already helping many families re-stabilize their finances , maintain ownership of their home , revitalize their credit rating and most of all help them weather the storm.

2. Brief Synopsis: F.S. 501.1377 violations involving homeowners during the course of Residential foreclosure proceedings

On October 1st, 2008 the State of Florida enacted a new law aimed at protecting homeowners who are in default on their mortgages, in foreclosure, or at risk of losing their homes due to nonpayment of taxes from fraud, deception, and unfair dealings with foreclosure rescue consultants or equity purchasers.

Some of the protections in the new law will prevent con-artists from rescuing homeowners by signing them into predatory loans, getting them to sign over their property unwittingly, or just pocketing a fee to negotiate with the lender and then disappearing.

The new law imposes two requirements on foreclosure rescue consultants, which the law defines as anyone who is offering to help stop, delay, or avoid foreclosure. The first requirement is that the consultant must provide a written agreement, give the homeowner a full day to review it before signing it, and then allow the homeowner three days to cancel after signing. The written agreement must fully describe all services to be provided and disclose the right to cancel the arrangement. The second requirement is that the foreclosure consultant cannot ask for or accept any fees for services until the consultant has provided all services listed in the agreement.
Anyone violating the provisions of the new law commits an “unfair and deceptive trade practice,” and could be sued by victims or by the state for those violations. Violators could be liable for damages, attorney’s fees, and civil penalties of up to $15,000 per violation.

3. Fannie Mae Pilot Program: Pre-approved Short Sales

The Wall Street Journal first reported in late 2008 that Fannie Mae would be pairing up with Countrywide Financial, now Bank of America, on a pilot program that would run from the end of December 2008-March 2009. Specifically, under this pilot program, Countrywide would determine the acceptable listing price for a given property, and then, the buyer would be sought using that “pre-approved” price. The pilot program was to be limited in scope, involving a few cities only, and the selected properties were exclusively Fannie Mae backed loans serviced by Countrywide.
Now, that the pilot has been completed, Fannie Mae is analyzing the program’s success to decide whether it will formulate a similar, nationwide, program Such program would streamline the short sale process, so that the parties to the transaction could close on a short sale in less than 30 days, rather than the typical 60-90 days from date of submission of the short sale offer and financial package. Fannie Mae can follow in Freddy Mac’s footsteps, in this regard, as they have been having considerable success with these streamlined short sales.

While this program sounds promising, real estate professionals have expressed skepticism in one regard. There is great concern that Fannie Mae’s pre-approved short sale prices will be over market value. It appears that Fannie Mae has gained a reputation for over-valuing homes. If this was to happen, the program would not be helpful to anyone. Hopefully, however, the mortgage giants received that memo, and will fairly price homes, so as to make this program one of the first truly promising solutions to this real estate market crisis.

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