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The Mortgage Bankers Association (MBA) reported that foreclosures will hit a high mark this fall. The actual data reported as of June 30, 2009 showed a record 9.24% of all mortgages are delinquent. This represents about 4 million homeowners who are 30 days behind on their mortgages. In addition, there are 4.3% of all mortgages that are already in the process of foreclosure. This means that there are a combined 13.16% of all mortgages that are delinquent and are in the process of foreclosure as of June 30, 2009.
The reasons for the increase in delinquencies are: (1) more option Adjustable Rate Mortgages (ARM) are resetting to higher rates triggering defaults and (2) more prime fixed-rate loans are defaulting due to job losses. In California, Notices of Default (the start of foreclosure process) were sent to 108,000 households in July 2009 alone.
Question: What should homeowner do to avoid situation when a Notice of Default is forthcoming?
Answer: Homeowners should consult with a loan modification attorney to protect their rights and save their home. The banks are very slow in responding to loan modification request. Bank of America and Wells Fargo bank (which accounted for majority of all mortgages) reported to have modified loans of a mere 5% and 6% respectively of the delinquent borrowers. The main reason is that the staffs in the Loss Mitigation Department of the bank are so busy that they have insufficient time to analyze the individual borrower’s case. There is a huge number of applicants, but the banks staffs are insufficient to serve them effectively. Many of my clients tried to do the loan modification themselves but they are unsuccessful. After they signed up for our services, we immediately contacted the banks and they ultimately agreed to offer modification terms to our clients.
Question: What types of loan can be modified under the Obama program?
Answer: The Obama Loan Modification Program will modify loans that are secured through Fannie Mae and Freddie Mac. FHA loans have their own program of loan modification.
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