Phoenix AZ real estate is down. That is no secret. As a result, increasing numbers of homeowners are finding that their home is now ‘under water’; meaning the loan amount of the borrower is larger then the value of the home.
Add to the problem, the now infamous ‘sub-prime’ mortgage meltdown and pervasive adjustable rate mortgage (ARM) that are now resetting to higher and often unmanageable interest rates, many Phoenix AZ real estate owners are making the conscious decision to walk-away from the payment, the home, and ultimately the house is foreclosed upon by the bank.
The government through such programs as the Hope for Homeowners Act is pressing banks and lending institutions to work with borrowers in what is called “Loss Mitigation“.
Short Sales are the most common form of loss mitigation where the bank agrees to take less money then the borrower owes and the home is sold. However, short sales reduce the amount of money they receive as they do not recover any interest , fees, principal in arrears and take a (usually) drastic loss in the home.
Loan modifications – where the lender agrees to a loan re-structure provides for lower interest rates and terms and often penalties, fees, interest and principal in arrears tacked onto the back of the loan, has emerged as a alternative for banks as a way to keep borrowers in the home paying interest and keeping less bank owned real estate hitting the market for sale which further drives down prices.
There are 4 types of loan modification methods you can use to work with your bank/lender to negotiate new terms that will (hopefully) keep you from losing your home.
- Do it yourself loan modification – Despite, the rampant advertising promising results, you do not need a loan modification company or an attorney. You will need to spend a lot of time to get to the loss mitigation department of your bank and get the required financial information to them on your own.
- Loan Modification Companies – These can cost $1,000 or more. However, they now the process, required information from you and even have relationships with lenders. Most of these companies do a great job for you. Be careful of scam artists. Make sure you ask for referrals.
- Attorney Loan modification company -These are law firms specializing in loan modification. Thy cost as much as $3,000 or more. However, they do perform a forensic audit on your mortgage looking for possible cases of predatory lending. Rumor has it, and I can not confirm it, but many believe that banks deal with attorney loan modifications first. Then , and if there are none of those, then the lenders get to non-attorney loan modifications.
- FHA “Hope for Homeowners” – Sponsored by the FHA and HUD , the FHA will refinance loans of borrowers having payment problems if the existing investor (lender) will write down the loan balance to 90% of market value.
If you want to stay in your home and have the means to pay a fixed amount, contact your lender right away. If the foreclosure process has started, then time is of the essence.
I recommend you try working with your bank yourself first. If you find that it is too time consuming, confusing or emotionally troubling contact a loan modification specialist.
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Copyright © James Wexler *4 types of loan modification experts*
If you are listing your home as a short sale in Phoenix Arizona or Scottsdale Arizona make sure you hire an agent who knows how to do short sales and has the experience to get the job done.
Call 480.221.8080 to find out more about Phoenix AZ Short Sales and Scottsdale AZ short Sales
