Fannie Mae and Freddie Mac Loan Modification

Fannie Mae and Freddie Mac has made a press releases stating they were establishing framework for loans in their portfolio to be reviewed for a loan modification. When this info was released, I was left scratching my head… I’m still pondering why the people who need help the most  help are excluded from the mortgage Titan’s immediate guidelines? Lets take a look at  a few of  Fannie and Freddie’s guidelines for a Loan modifcation package:

 

1. The new plan is designed to keep struggling borrowers in their homes by reducing their monthly payments to no more than 38 percent of the borrower’s gross monthly household income.

 

(This helps the homeowner and gives the modifying attorney a good guideline to work within. The guideline for a modified proposal for a new interest rate is 200bps above  the current 10 year  T- Bill average. If the client does not have enough disposable income they don’t qualify. I have no problem with this guideline, it makes it clear who qualifies and who does not)

 

2.  Borrowers who are in bankruptcy are not eligable to participate. The home must be a single family owner occupied home. All others are not considered in current guidelines

 

(This is a catch 22. If the borrower is in Bankruptcy this is typically because of a “life event” that has procluded the debtor from being able to maintain regular monthly payment. A Bankruptcy debtor maybe forced to have a post petition modification hearing, or have a voluntary dismissal. The idea of dismissing a bankruptcy to save your home is very much conflicting. If the debtor misses payments, and the mortgage company moves to lift the debtors stay, they suddenly become eligable? It does not seem right. The option of a court intervention of a post petition modification is another cost to the debtor. The post petiton modification often times is a disorganized process for the lender. Most of the Bankruptcy department has no idea what loss  mitagation is doing and vice versa. The most puzzling part is the single family home part. Lenders have modified 2 family dwellings but the guideline reads as single family home.

 

3. Fannie and Freedie are the ones that established this guideline.

 

(Fannie and Freddie are now goverment run agencies. They do not have investors to pascify. Fannie and Freddie have never been know the lend money to “subprime” borrowers. Fannie and Freddie never really wrote risky loans. The loans in Fannie Mae and Freddie Macs portfolio defaults in comparison to the private firms defaults is negligable in comparison. Between 2005-2006 65% of loan were securitized outside of Fannie Mae and Freddie Mac ( HUD) “private label securities represent less than 20% of the mortgages but 60% of the serious delinquencies.” This is an obvious problem that needs to be addressed.

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About the Author:
Shawn Peck is an active approved loan modification specialist. Mr. Peck has spent 10 years working with Chapter 13 debtors as a home loan modification specialist.Mr Peck works in tandem with attorneys who handle all apects of preparing forensic TILA,RESPA loan audits for his office. Mr. Peck has succesfully modified many mortgages notes on behalf of his clients in partnership with HUD’s Hope Now Initiative.
Please Email Mr. Peck with the subject “Loan modification” to recieve
A free special report. “DIY Loan modifications” WWW.LEARNLOANMODSNOW.COM

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The Role Of The Commercial Loan Review In Restructuring Agreements

The commercial loan review has opposite meanings for the the borrower and the lender when they are preparing to negotiate for a  restructuring of the debt.  Loan restructuring is being pushed by bank regulators, such as the Federal Reserve and the Federal Deposit Insurance Corp. (FDIC), because they know that this will lead to better results for both parties.

It is the contention of the financial regulators that many of the commercial property owners are only experiencing a temporary setback in their finances and that they are actually willing to go on paying for the mortgage if this is made possible.  They also know that providing the borrowers with some room for recovery would be advantageous for the banks and the economy in the long run.  Naturally, the regulators also pointed out that even if they have expressed their support for restructuring the loans, this does not mean that the lenders will disregard the basic rules for assessing risks and approve all applications.  Offering a commercial loan modification to a business that has very little chance of surviving does not make sense because foreclosure is inevitable.

Basically, what the bank regulators are suggesting that banks should do is to expand their creativity when trying to look for ways to help the businesses that still have a chance of surviving the crisis.  This is where the commercial loan review comes into play.  This is the procedure for assessing the capacity of the borrower to repay the loan if the terms were adjusted.  The issues that have to be taken into account by the banks include the cash flow of the business or individual, the payment record, the market situation, and the presence of potential guarantors for the property owner.  In simple terms, the commercial loan review that the lender will perform will play an important role in the approval of the workout.

Meanwhile, a different kind of commercial loan review is conducted for the borrower by a loss mitigation professional or consultant.  This activity will focus on the original loan agreement because experts have discovered that 80 percent of the loans that were released for commercial properties during the prosperous years in real estate contained flaws.  These errors are violations of some of the rules and regulations that have been established to protect borrowers from abusive lenders.  The point is that the corresponding penalties for these flaws are usually severe, such as requiring the lender to return to the property owner all interests that have been paid since the beginning of the mortgage.  Moreover, the bank would not be able to apply any of the provisions contained in the original agreement and this includes repossession or foreclosure of the property.  Thus, this could be a powerful tool for the borrower in the event that such violations are actually found in the documents.

If such violations are found, this will also assist the property owner even if the process of foreclosure has already been initiated.  The proceedings will be stopped by the court while it has not yet decided if the bank had indeed made those violations.  The commercial loan review will indeed provide the borrower with a strong weapon when negotiating with the bank for a loan restructuring.

Do you want to learn more about commercial loan modification? Stop by and visit us at our commercial loan modification website. You should also read our recent blog post on commercial loss mitigation.

Article Source:http://www.articlesbase.com/banking-articles/the-role-of-the-commercial-loan-review-in-restructuring-agreements-1561813.html

The Basics Of The Commercial Loan Review

The owner of a commercial property, such as a shopping center, strip mall, apartment complex, office building and multi-tenant building, can collaborate with the bank or lender for a possible commercial loan modification.  This adjustment to the commercial loan may result into the reduction of the amount that is due, the temporary payment of interests only, the extension of the duration of the loan, or a decrease in the interest rates.  However, before the talks on possible modifications to the terms of the loan agreement can be held, the lender has to conduct a commercial loan review.  This review will include the analysis of the information regarding the borrower and the different documents.

The commercial loan review will involve both the borrower and the lender and is necessary before a commercial loan modification could be agreed upon by both parties.  It should be noted that the financial regulators are recommending loan workouts because they realize that most of the borrowers do not necessarily want to default on their loans but have only temporarily lost their abilities to come up with the originally agreed upon payments as a result of the economic situation.  A number of the commercial property owners only need a breather to recover from their present financial conditions while others may need a permanent change to the terms of the loan.  The loan workout will be advantageous to the borrower because it will forestall the repossession or foreclosure of the property.  It will benefit the lender because the expenses required a foreclosure are avoided and the payments will still be made by the borrower albeit at lesser amounts.  During the crisis in the commercial real estate market, the lender also avoids being stuck with assets that are very difficult to sell if a commercial loan modification is allowed.

The lender utilizes the commercial loan review to ensure that the business has the capacity to provide for the mortgage payments in case the adjustments are allowed.  Some of the factors that the bank or lender will look into during the procedure to determine the creditworthiness of the commercial property owner include the trend in the cash flow of the business, the payment history, market conditions, and the presence of guarantors.

From the point of view of the borrower, the commercial loan review process is quite different.  Loss mitigation attorneys and experts usually help the property owner in this procedure by carefully scrutinizing the various details of the original loan agreement.  The reason for this is that many agreements that were made during the times when commercial real estate was booming contained flaws or violations of laws and regulations that were created to protect the rights of the borrowers.  If such violations are discovered in the loan contracts, the lender would not be able to enforce all of the provisions found in the agreement, and this includes foreclosure.  The lender may even be required to return to the borrower the interests that have been paid from the beginning of the loan.  Therefore, the commercial loan review can provide the borrower with powerful negotiation tools that can hasten the lender’s approval of the commercial loan modification application.

Ready to learn more? Stop by and visit us at our commercial loan modification site. You may also want to check out our blog post on commercial loss mitigation.

Article Source:http://www.articlesbase.com/banking-articles/the-basics-of-the-commercial-loan-review-1544843.html

Getting A Loan Modification While Unemployed – How It Is Done.”

It used to be a basic expectation if you were applying for a loan, you had to be employed. Today, in a time of economic unrest and government support offered to lenders, there is a lot more leeway when it comes to giving loans, and unemployed applicant may find themselves approved.

Job lose is much more common and homeowners who are unemployed are wondering if their applications for loan modification will be approved. Actually, it is more difficult for unemployed homeowners to have their loans approved by lenders and the difficulty increases the longer the homeowner has been without work.

If you are unemployed and you need a loan modification in order to keep your family in their home, you are not alone. In the United States unemployment is on the rise and the entire country is feeling the effects. You are fearful of foreclosure. There are options available to you. Since unemployment is such a common occurrence, the Home Affordable Program strongly encourages banks to work with homeowners.The truth is that mortgage lenders are mainly concerned with your debt to income ratio as the determining factor in getting a loan modification. You will have a better chance of getting approved if you are getting unemployment checks. If you do are not getting any compensation, you still have a chance.

It might be beneficial to wait to apply for a modification until you at least have something hopeful in the future or have had a job interview. The lender is already losing money when a loan modification is granted and if there is suspicion that you are not going to be able to pay your mortgage, the bank will be very hesitant. You can apply for a modification up to 30 days before the foreclosure date, so if you wait a little while, you might improve your chances.

Rarely a lender will approve a loan modification while the homeowner is unemployed. When this happens, the homeowner has met the qualifications set by the bank to a T and has an excellent work history. Your chances of this happening are much better if you have worked for a company for a long time than if you worked there for only a few months. Work history is as important to the bank as it is to future employers, as it directly affects the possibility of getting a new job.

Whatever you situation, if you are unemployed, being approved for a loan modification is not going to be easy. Even unemployment checks may not meet the requirements of your lender. In normal circumstances it is difficult to get a loan modification approved, without a job, it is even harder. You can always try; you never know what is going to happen.

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Home Saver’s Report Review

Saving your home starts with you!! 98% of all foreclosures can be stopped. Home Saver’s Report contains a number of options for homeowners to save their home. Here are some of them

• Have adjustable rate mortgage converted to a fixed rate
• Get your lender to suspend your payments for several months so you can get caught up
• Get back payments spread over the life of your loan
• Make repayment plan actually affordable
• Get your payments and/or your interest rate lowered
• Special government program that will give a second mortgage for all the back payments, interest, and legal fees

Home Saver’s Report provides simple directions for getting a loan workout plan that benefits you and your lender. It also explains about the best option to save your home Loan Modification.

It is impossible to stop foreclosure if you do not know where to call, what to ask for, and exactly what options you have to save your home. Saving your home takes knowledge and information. And this information is provided in Home Saver’s Report.

Read more about Home Saver’s Report.

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