US Home Loan Advocates was featured in a recent Los Angeles Times article, titled: Get Ahead Of The Slow Moving Loan Mod Train, where our President, David Bartels, was interviewed about the challenges homeowners face when they are seeking payment relief and are not currently in default.
The key to eligibility is your “front end” debt-to-income ratio. The total of your principal, interest, taxes, insurance and homeowners association dues must be greater than 31% of your gross household income.
If it is, you should be eligible for a loan modification. But you’ll have to call your lender or servicer — the company that collects the payments on behalf of the loan’s owner — to determine if it is participating in the White House program. Supposedly, servicers handling some 80% of all mortgages are taking part.
If you are eligible, it is possible to obtain a loan modification even if you are still current on your house payments. But if you are not eligible for the Making Home Affordable Program — that is, your income is too high — you still may be eligible for a more traditional solution, such as forbearance for a few months until you get back on your feet.
Unfortunately, said David Bartels, president of U.S. Home Loan Advocates, a Westlake Village company that offers mortgage-modification services, your lender-servicer probably won’t deal with you until you are in default or in imminent danger of defaulting. Default is different from delinquent. You are not in default until you miss three consecutive payments.
Under the Obama plan, your loan’s interest rate will be reduced in 0.125% increments until your payment reaches the 31% debt-to-income target. If the rate drops to 2% and you still haven’t hit the target, the term of your loan will be increased in 10-month increments until the goal is met. If the term reaches 480 months and still no success, the servicer will start reducing your principal.
But Bartels cautions that lenders will consider other factors apart from your housing debt-to-income ratio. Also on the table will be your total debt to income, cash flow and the equity you have in your property at its current value. All of these things “must line up and meet the bank’s requirements to obtain a modification,” he says.
The article also explains the importance of having all of your hardship paperwork organized and properly packaged when submitting a request for a loan modification.
Since there is a big misconception between a trial modification vs a successful loan workout, it is important that distressed homeowners arm themselves with the correct loan modification information before presenting a scenario to a bank.
“Getting a loan modified has nothing to do with being a good negotiator,” says Bartels, whose company, unlike many of those that have been chastised by the Federal Trade Commission, charges no upfront fees. “The bank is going to make a decision based on the math. If the bank will make more money by modifying versus foreclosing, it will modify it.”
With No Up-Front Fees, our clients only pay for Results.
Call us today if you have questions about packaging and
submitting a Loan Modification request.
877-496-5393
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