Loan Modifications Reality Check
 Every other ad on the radio these days seems to be about loan modifications. Lawyers are warning you not to use brokers. Brokers are insisting that when they are done you will have a free house with oil in the backyard. Consumer advocates claiming that anyone that charges you for a loan modification is ripping you off because as soon as you turn 18, you are automatically endowed with an understanding of how to package a loan modification. There are still so many misconceptions on this topic it is probably time for an update.
1. Are banks reducing principal balances yet? For the most part, the answer is no. However, we are seeing a trend towards principal forbearances. Here is how they work. Assume you have a $400,000 loan at 6.5% interest. Your full principal and interest payment would be $2528, which for the sake of this example presents a financial hardship. When a bank approves a principal forbearance, this is what they do. They take a portion of the loan, let's say $100,000, and waive the interest on that portion as if it didn't exist. You have no further obligation on that portion of the loan balance unless and until you refinance, sell or otherwise satisfy the loan balance. They then take the remaining balance of $300,000 and reduce the interest rate to let's say 4.5%. Using these numbers your payment would drop from $2528 to $1520. Not a bad deal.
2. Are you being ripped off if you pay for a loan modification? I think all of the homeowners that tried to do it themselves, got declined and then successfully got a modification after retaining a professional could probably answer that better than I can. The claim is that because you can do it yourself, you are being ripped off if you pay for it. I guess by this logic if you pay a painter to paint a room in your house, the painter ripped you off because you could have painted it yourself. Obviously, there are many services that we could do ourselves that we would rather pay someone else to do. The reason we pay painters is because they will make less of a mess, there is a greater probability that they will produce a better result and we would rather be doing something else.
3. If you decide not to do it yourself, should you use a lawyer or a broker? It's illegal for a broker to accept an advance fee unless their agreement has been approved by the Department of Real Estate. So, you would need to confirm that their advance fee agreement has been approved. Lawyers do not have this restriction. That does not necessarily make them better qualified to do a modification. The bottom line is, experience. Modifications must be packaged correctly or they will be declined. The more familiar the company is with the particular quirks of particular banks, the more likely they are to be successful in getting your modification approved. And banks have many quirks.
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LOL - Laughs OnLine
"Economic downturn in Scotland results in underwear shortage."
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What's the Big Idea?
The first movement of Felix Mendelssohn's Violin Concerto in E Minor is one of my favorite pieces. The problem is that whenever I see it performed by the Los Angeles Philharmonic I have to make sure that I'm not seated in one of the upper levels. Why, you ask? Because if you have a mind like mine and you sit in the upper levels, you will find yourself noticeably distracted by the inordinate number of bald spots reflecting the stage lights into your eyes. The hair loss per capita is much more significant in LA Phil than the population at large. So much so that the following question naturally arises-what is precipitating such severe hair loss in men who play classical music in finely appointed concert halls? A couple of theories. One, the proliferation of mp3 players, itunes, Youtube and so many other forms of entertainment make the survival of orchestral performances questionable. Two, the very knowledge that people night after night are staring at your bald spot actually hastens the hair loss. I will need to dig further to get to the bottom of this mystery. I just hope there is no foul play at work.
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Share If You Care
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Sincerely,
Kwame J. Granderson
Equinaire
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Need a Loan Modification?
AmeRestart Can Help
Lender: GMAC
Loan Amount $375,750
Old Int. Rate: 9.5%
Old Payment: $3,718
New Int. Rate: 5.75%
New Payment: $2,084
Monthly Savings: $1,634
These are real numbers!
Click Here to learn more.
Call 877.619.3258
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