If you're concerned about how to do a loan modification, here are 7 things you should be aware of.
1. Review your financial situation: Prepare a Financial statement including a detailed list of your expenses (food, gas, credit cards and other financial obligations) in a spreadsheet and calculate the average costs on each item for the past 3 months or so. This is important because most lenders would ask you questions on your financial situation and require you to submit a Financial Statement.
2. Hardship letter: Prepare a Hardship letter of not more than 2 pages wherein you'll put down why you aren't able to carry on with the usual payments and why you need a loan modification. Know how to write a hardship letter.
3. Collect documents: You need to gather certain documents which the lender may review when you request for mortgage loan modification. The documents are:
Pay stubs and bank statements for past 2 months
W-2 Form for last 2 years for the employed
Form 1040 for last 2 years if you're self employed
Rental Agreement if the loan is not on your primary home
Most recent mortgage statement
Property tax statements
4. Contact your lender: Call up the lender and make him aware of your situation. An even better way to communicate is by sending a hardship letter. It is easier to get a home loan modification if you're behind on payments. However, you may get approved even though you're not yet late but are not sure whether you can keep up the payments.
5. Fill out paperwork: Once you qualify for mortgage modification, the lender will send an information packet and a financial worksheet for you to calculate your expenses. You need to attach documents you've collected along with the worksheet. This is for your lender to assess your financial situation and interpret whether you can pay your mortgage after home loan modification.
What you need to prove by filing out the paperwork is that the loan modifications will help improve your situation and make your payments manageable.
6. Written Agreement: Once the lender reviews your paperwork, he may verbally agree to modify your loan. He'll also send you a document explaining the loan modification offer for your approval.
7. Stop gap repayment plan: Once you accept the offer, the lender will need you to start off a stop gap repayment plan till the mortgage modification goes through. This will go on for maximum 60 days during which the lender reviews your loan status, financial statement and documents in order to assess the risks in modifying your loan.
During the stop gap period, you need to prove that you can afford monthly payments along with other expenses after loan modifications. Only then you have a fair chance to get your loan modified.
Home loan modification may be offered alone or as a part of forbearance. However, not all loans are appropriate for mortgage modification. Loans being modified are mostly those which are above the market rates or have lower loan-to-value ratios and mature terms. Mortgagefit.com
Note: If you feel that you need help with the negotiating process, Fortified Financial is a Loan Modification Company (with offices in St. George) that can help people modify their current home loan who cannot refinance. They have been extremely successful in helping families from losing their home from foreclosure.
Visit their website at fortifiedinancial.com
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Wednesday, October 21, 2009
Like it or not more stimulus may be coming
Homebuyer tax credit expansion
An estimated 1.4 million tax filers to date have taken advantage of a temporary first-time homebuyer tax credit aimed primarily at people making less than $75,000 ($150,000 for joint filers). An estimated 15% of them bought their home specifically because of the tax break.
The latest iteration of that credit is worth $8,000, and it's scheduled to expire on Nov. 30.
Many lawmakers want to extend that deadline, expand eligibility beyond first-time homebuyers and include those who make more than is allowed under the current rules.
Sen. Johnny Isakson, R-Ga., and Sen. Chris Dodd, D-Conn., co-sponsored an amendment to the unemployment extension bill that would extend the credit until the end of June 2010 and be available to single filers making up to $150,000 and joint filers making up to $300,000.
The amendment may or may not remain attached to the unemployment bill -- which has been stalled due to political skirmishes between Democrats and Republicans. But Congress Daily reports that senators and aides "said both [measures] appear likely to clear the chamber in some form this fall."
It's still not clear where the White House stands. At a Senate Banking hearing on Tuesday, Housing Secretary Shaun Donovan said "within a few weeks we'll have sufficient data to get to a conclusion on this."
Estimated cost: The Isakson-Dodd bill is estimated to cost $16.7 billion. Isakson said at the Senate Banking hearing that he'd be happy to look for ways to pay for it and Dodd concurred. Typically, if a measure is considered stimulus it is not something that lawmakers feel obligated to pay for by either reducing spending or raising revenue in other areas.
CNN Money
An estimated 1.4 million tax filers to date have taken advantage of a temporary first-time homebuyer tax credit aimed primarily at people making less than $75,000 ($150,000 for joint filers). An estimated 15% of them bought their home specifically because of the tax break.
The latest iteration of that credit is worth $8,000, and it's scheduled to expire on Nov. 30.
Many lawmakers want to extend that deadline, expand eligibility beyond first-time homebuyers and include those who make more than is allowed under the current rules.
Sen. Johnny Isakson, R-Ga., and Sen. Chris Dodd, D-Conn., co-sponsored an amendment to the unemployment extension bill that would extend the credit until the end of June 2010 and be available to single filers making up to $150,000 and joint filers making up to $300,000.
The amendment may or may not remain attached to the unemployment bill -- which has been stalled due to political skirmishes between Democrats and Republicans. But Congress Daily reports that senators and aides "said both [measures] appear likely to clear the chamber in some form this fall."
It's still not clear where the White House stands. At a Senate Banking hearing on Tuesday, Housing Secretary Shaun Donovan said "within a few weeks we'll have sufficient data to get to a conclusion on this."
Estimated cost: The Isakson-Dodd bill is estimated to cost $16.7 billion. Isakson said at the Senate Banking hearing that he'd be happy to look for ways to pay for it and Dodd concurred. Typically, if a measure is considered stimulus it is not something that lawmakers feel obligated to pay for by either reducing spending or raising revenue in other areas.
CNN Money
Thursday, October 8, 2009
Home Buyer Tax Credit Initiatives
NAHB sent letters to the House and Senate this week thanking members for introducing legislation that would extend the $8,000 first-time home buyer tax credit, which is due to expire on Dec. 1. House Ways and Means Committee Chairman Charles Rangel (D-N.Y.) recently introduced HR. 3590, the Service Members Home Ownership Tax Act of 2009. The legislation would extend the credit for one year for qualifying service members.
In a letter supporting Rangel’s effort to ensure that the home buyer tax credit is fully available to all of the men and women in service to our country, NAHB Chief Lobbyist Joseph Stanton said “we look forward to working with you to extend the credit, so it can continue to provide a much-needed boost to the economy.”
Meanwhile, Sen. Ben Cardin (D-Md.) introduced S. 1678, a bill to extend the home buyer tax credit for six months. The bipartisan measure has six co-sponsors, including Senate Majority Leader Harry Reid (D-Nev.) and Sens. Saxby Chambliss (R-Ga.), Kirsten Gillibrand (D-N.Y.), Jon Ensign (R-Nev.), Johnny Isakson (R-Ga.) and Debbie Stabenow (D-Mich.).
NAHB on Sept. 22 sent a letter to Sen. Cardin stating that S. 1678 is an “important first step in ensuring that this powerful economic incentive does not lapse as the Nov. 30, 2009 expiration date approaches. However, NAHB believes that the tax credit must be extended for an additional year and made available to all purchasers of a principal residence.” The message on the tax credit conveyed the same points that NAHB is issuing as part of its “Revive Housing, Restore America” campaign, which also seeks congressional action to resolve the credit crunch, correct a faulty appraisal process and expand the tax code’s net operating loss carry back provision for businesses to help prevent further layoffs.
An extension of the tax credit for a full year and an expansion to all purchasers of a principal residence would spur more than 383,000 additional home sales and help mitigate the resurgent foreclosure crisis, the NAHB letter to Cardin said. “Extending and expanding the credit would also create nearly 350,000 desperately-needed jobs during the coming year in many industries, including manufacturing, retail and real estate-related industries.”
There are a number of bills pending in the House and Senate that seek to extend and enhance the home buyer tax credit. NAHB is continuing its advocacy efforts on all fronts to let Congress know that prompt action is needed to help create jobs and move housing and the economy to higher ground. For example, NAHB President and CEO Jerry Howard this week emphasized these same points regarding the tax credit in interviews with CNN/Money, Congressional Quarterly and the L.A. Times.
NAHB Chief Economist David Crowe tied in the need for Congress to act on the home buyer tax credit in an appearance on Fox Business TV to discuss the government’s new-home sales report for August. He stressed the same message while discussing the new-home sales data with ABC Radio, CNN Radio and the Associated Press, and these points were also highlighted in a press release to the media. Also aiding our efforts, the Philadelphia Inquirer this week reported on a study by Campbell Surveys that says the home buyer tax credit has directly resulted in 357,000 home sales between Feb. 17 and Sept. 15. Using transaction information obtained from real estate agents, Campbell Surveys found first-time buyers accounted for 32 percent of home sales before passage of the American Recovery and Reinvestment Act on Feb. 17, and 42 percent to 43 percent in ensuing months. The article noted that the data “adds support to calls for extending the credit past its Nov. 30 deadline,” and quoted NAHB Director of Tax Issues Rob Dietz, who said: "We're looking for one more year, to Nov. 30, 2010, and extending the $8,000 credit to all primary-home buyers."
In a letter supporting Rangel’s effort to ensure that the home buyer tax credit is fully available to all of the men and women in service to our country, NAHB Chief Lobbyist Joseph Stanton said “we look forward to working with you to extend the credit, so it can continue to provide a much-needed boost to the economy.”
Meanwhile, Sen. Ben Cardin (D-Md.) introduced S. 1678, a bill to extend the home buyer tax credit for six months. The bipartisan measure has six co-sponsors, including Senate Majority Leader Harry Reid (D-Nev.) and Sens. Saxby Chambliss (R-Ga.), Kirsten Gillibrand (D-N.Y.), Jon Ensign (R-Nev.), Johnny Isakson (R-Ga.) and Debbie Stabenow (D-Mich.).
NAHB on Sept. 22 sent a letter to Sen. Cardin stating that S. 1678 is an “important first step in ensuring that this powerful economic incentive does not lapse as the Nov. 30, 2009 expiration date approaches. However, NAHB believes that the tax credit must be extended for an additional year and made available to all purchasers of a principal residence.” The message on the tax credit conveyed the same points that NAHB is issuing as part of its “Revive Housing, Restore America” campaign, which also seeks congressional action to resolve the credit crunch, correct a faulty appraisal process and expand the tax code’s net operating loss carry back provision for businesses to help prevent further layoffs.
An extension of the tax credit for a full year and an expansion to all purchasers of a principal residence would spur more than 383,000 additional home sales and help mitigate the resurgent foreclosure crisis, the NAHB letter to Cardin said. “Extending and expanding the credit would also create nearly 350,000 desperately-needed jobs during the coming year in many industries, including manufacturing, retail and real estate-related industries.”
There are a number of bills pending in the House and Senate that seek to extend and enhance the home buyer tax credit. NAHB is continuing its advocacy efforts on all fronts to let Congress know that prompt action is needed to help create jobs and move housing and the economy to higher ground. For example, NAHB President and CEO Jerry Howard this week emphasized these same points regarding the tax credit in interviews with CNN/Money, Congressional Quarterly and the L.A. Times.
NAHB Chief Economist David Crowe tied in the need for Congress to act on the home buyer tax credit in an appearance on Fox Business TV to discuss the government’s new-home sales report for August. He stressed the same message while discussing the new-home sales data with ABC Radio, CNN Radio and the Associated Press, and these points were also highlighted in a press release to the media. Also aiding our efforts, the Philadelphia Inquirer this week reported on a study by Campbell Surveys that says the home buyer tax credit has directly resulted in 357,000 home sales between Feb. 17 and Sept. 15. Using transaction information obtained from real estate agents, Campbell Surveys found first-time buyers accounted for 32 percent of home sales before passage of the American Recovery and Reinvestment Act on Feb. 17, and 42 percent to 43 percent in ensuing months. The article noted that the data “adds support to calls for extending the credit past its Nov. 30 deadline,” and quoted NAHB Director of Tax Issues Rob Dietz, who said: "We're looking for one more year, to Nov. 30, 2010, and extending the $8,000 credit to all primary-home buyers."
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