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MORTGAGE MODIFICATIONS TEND TO FAIL

By Richard Zaretsky

Real Estate Attorney with THE ZARETSKY LAW GROUP - Board Certified Real Estate Atty and AUTOMATED LAND TITLE COMPANY

February 04, 2009 12:34 AM

Here is an interesting article from the Washington Post that describes the difficultiy many homeowners have with modified mortgages. See http://www.washingtonpost.com/wp-dyn/content/article/2009/02/02/AR2009020203163_pf.html

Some interesting statistics show that the avergage modification increases the principal balance. This is probably because some delinquency is added to the principal.

We just had a modification that changed the interest rate but not the payment amount. OK, it became interest only instead of negative amortization, but what good is it to someone that got a pay cut and can't afford the payments? At best it was a stop gap measure and the borrower knows it.

The lender approach is still playing the numbers with an outlook to making a profit - as the article points out once you get to the last paragraph! Capitalism is good and no one goes into business to make a loss.

But you have got to question where is the TARP money going and why is it not being targeted to the housing mortgage market to allow losses so the housing market and lending market can stabilize?

Be sure to contact your own attorney for your state laws, and always consult your own attorney on any legal decision you need to make. This article is for information purposes and is not specific advice to any one reader.

Richard Zaretsky, Esq., RICHARD P. ZARETSKY P.A. ATTORNEYS AT LAW, 1655 PALM BEACH LAKES BLVD, SUITE 900, WEST PALM BEACH, FLORIDA 33401, PHONE 561 689 6660 RPZ99@Florida-Counsel.com - FLORIDA BAR BOARD CERTIFIED IN REAL ESTATE LAW - We assist Brokers and Sellers with Short Sales and Modifications and Consult with Brokers and Sellers Nationwide! Shortsales@Florida-Counsel.com New Website www.Florida-Counsel.com. See our easy to find articles at Need Short Sale Information? - These Articles Probably Answer Your Question

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Rob Arnold

Sand Dollar Realty Group, Inc. - Altamonte Springs, FL

Metro Orlando Full Service - Investor Friendly & F

Unless the principal ultimately gets reduced to match the actual market value, in the long term the loan will fail. That's because people can't sell or refinance. And if the payment increases to more they can afford ...

Feb 04, 2009 03:49 AM

Anonymous

beachdude

A Mortgage Modification is a process whereby a home owner's mortgage is modified and both the lender and homeowner are bound by the new terms of the new mortgage. The most common mortgage modifications are listed below:

lowering the mortgage interest rate
reducing the mortgage principal balance
fixing adjustable interest rates within the mortgage
increasing the loan term throughout the mortgage
forgiveness of payment defaults and fees
or any combination of the above

Check out this public service site at http://mortgagemodificationinfo.org

Feb 04, 2009 06:13 AM

Mike Sackman

MAS Real Estate Advisors - Beaufort, SC

Realtor, Broker ABR, CRS. Closer!

Rich, I sent you an email with a question about a company I want to work with for short sales.

Thank you,

Mike

www.beaufortrealestatepro.com

Feb 04, 2009 08:11 AM

Gabe Sanders

Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL

Stuart Florida Real Estate

Lots of companies coming out of the woodwork promising all sorts of relief for the folks in trouble. More often than not, it's only a way for those companies to make money while the homeowner gets deeper into trouble.

Feb 04, 2009 08:49 AM

Sidney Jimenez

Keller Williams - Miramar, FL

CDPE, Short Sale Expert, 954-665-9449,

You know what's a shame? Many of the modification companies are being run by ex-mortgage brokers that are now exploiting the trouble they helped cause.

Feb 04, 2009 09:09 AM

Bryant Tutas

Tutas Towne Realty, Inc and Garden Views Realty, LLC - Winter Garden, FL

Selling Florida one home at a time

Richard, "Loan mods" are the new hot product to be selling for 2009. I see no benefit at all to the homeowner unless the principle balance us reduced. Other than that it's just prolonging the inevitable. Am I missing anything? Should I be offering loan mods as part of my business?

Feb 04, 2009 10:13 AM

Wendy Smith

Wendy Smith Real Estate - Clearwater, FL

Real Estate Advisor

I do...for now, anyhow. Everybody isn't upside down but the lenders make it so difficult, the pay is so low, and I cannot yet afford to do all the work pro bono. I wind up doing too much work for peanuts because I feel so bad for the folks that truly have a hardship, that truly are trying only to get bullied by their mortgage company.

I'm thinking forensic loan audits are a way to go for some relief

Feb 16, 2009 09:57 AM

Richard Zaretsky

THE ZARETSKY LAW GROUP - Board Certified Real Estate Atty and AUTOMATED LAND TITLE COMPANY - West Palm Beach, FL

Florida Real Estate Attorney

AMAZING NEWS -

Today is the first business day of the week and we had TWO different lenders offer PRINCIPAL REDUCTIONS on loan mod requests!!!!!!!!!!!!!!!

In one the offer was 20% off the principal, term it to 40 years and knock 1 point off the interest.

In the other the same exact thing!

One was a principal residence and one was a 2nd home.

Is this a sign of things to come!!!?????

Feb 17, 2009 12:43 PM

Wendy Smith

Wendy Smith Real Estate - Clearwater, FL

Real Estate Advisor

OMG Richard - that is great. There IS hope. Care to share which lenders? Did you ask or did they suggest? (ok, so that's probably a silly question).

The 20% off - did that broing the principle amount closer to FMV?

Gosh, I have a dozen questions...I'm so excited about this.

Feb 20, 2009 03:14 AM

Wendy Smith

Wendy Smith Real Estate - Clearwater, FL

Real Estate Advisor

WAMU is talking principal reduction, so is Countrywide. yes!!!!

Feb 27, 2009 11:02 AM

Maya Thomas, Broker

Tampa, FL

Please see my client recommendations.

This is great news! I'm so grateful to you for sharing.

Mar 07, 2009 02:44 AM

Richard Zaretsky

THE ZARETSKY LAW GROUP - Board Certified Real Estate Atty and AUTOMATED LAND TITLE COMPANY - West Palm Beach, FL

Florida Real Estate Attorney

Maya-

Strange - I bet this comment that was part of the above was meant for my other post on commissions but it showed up in your message to me ......... so here it is again:

I have great news to share too and we need your input...

The way I read this is that lenders are no longer able to change commissions percentatges that are in a signed listing agreement between a seller and a broker. I have a closing on Monday. I'm going to go back to the lender and ask for our money. The loan was for more than $417,000 so does that mean that Fannie Mae has no say over it? How do I know how much leverage I have from your perspective?

No Negotiation of Preforeclosure Sales Commission
Servicing Guide,Part VII, Section 504.02:
Contacting Selected Borrowers
Effective March 1, 2009, closing of preforeclosure sales may not be conditioned upon areduction of the total commission to be paid to real estate agents to a level below what wasnegotiated by the listing agent with the borrower, unless the fee exceeds 6 percent of the salesprice of the property in aggregate. Servicers are reminded that they must continue to obtainany approvals that may be required by interested third parties in connection with preforeclosuresales.

My comment is that it is or it isn't Fannie Mae. If the lender is FM then your 6% listing agreement commission is protected and the servicer cannot reduce it. Ask the servicer the question on who owns the loan and get the answer in writing.

Richard Zaretsky

Mar 07, 2009 05:34 AM