UPSIDE DOWN HOMEOWNERS HAVE MORE OPTIONS
THAN THEY REALIZE…
Have you heard of a Preemptive Loan Modification?
Do you owe more than your property is worth? Are you upside down? Well, the answer to that question for many of us is yes. So, what can you do about it? Have you called your bank, been kept on hold only to be transferred to the loan modification department just to be told they can’t help you unless you have missed a couple of payments? You make those overinflated payments each month on time and in full because you want to “do the right thing” and keep your credit in good standing. Then you hear about something called HARP for homeowners that are upside down who are current, except you don’t qualify because your bank tells you that your loan isn’t a Fannie Mae or Freddie Mac loan. So, you’re shot down again.
Recently, I discovered something called a Preemptive Loan Modification. The banks won’t necessarily volunteer information about this. So, you have to know what to ask for. I’ve told a couple of clients about this and both have had their adjustable loans modified without having to miss any payments or incurring any negative impact to their credit. My clients that had loans with banks offering this option were in disbelief because it saved them way more than if they had actually refinanced their loan at the current market interest rates. One thought it was actually too good to be true. It is exactly what it sounds like, a preemptive to a loan modification. You just need to know what to ask for because depending on who you get on the phone, they won’t necessarily tell you about this.
I initially discovered this program when I called my bank for the third or fourth time to inquire about the National Mortgage Settlement Act. The Mortgage Settlement Act was announced back in February of this year and impacts borrowers with the five big banks: JP Morgan Chase, Bank of America, Wells Fargo, GMAC and Citibank. This wasn’t an immediate solution. Every time I have called over the last 6 months I was told the same thing. “Someone will notify you if your loan qualifies for this program let me transfer you to our loan modification department”. This was a total waste of my time each time I called. A friend and client of mine was going through the same thing and called his mortgage holder to try to lower his rate. He was lucky enough to get someone on the phone with the loan modification department who shared with him that he might qualify for a preemptive modification. In less than two months they reduced his rate to 2% for the first five years then it would go up and cap at 3.75% for the remainder of a 40 year loan. This reduced his mortgage by almost $1000 a month! Please keep in mind that this is just one example and rates will vary depending on when you call. This has given him the flexibility to hold on
o his home until the market recovers enough for him to sell it, so who cares if it’s a 40 year loan.
I hope this information can help some of you in this same situation. There are options, but you have to know what to ask for. Not every bank will do a Preemptive loan modification and the rates and programs will vary, but it couldn’t hurt to ask right?
If you have any questions about this please give me a call and if this helps you and you are able to reduce your mortgage payments because of this information please let me know.