Loan Modifications Sales

							               Loan Modifications and Short Sales

Loan Modifications: So, you are thinking about getting a loan modification to help with
your monthly cash flow. Let’s think this through together because you need to know
and understand some basic terms of your transaction.
   1. When a Loan Modification is completed you will receive a lower house payment
      but, most likely, continue to owe the full amount of the mortgage.
   2. At the end of the Loan Modification Period (3-5 years) you will be adjusted back
      to the actual amount of the original mortgage.
   3. If your home loan was used to purchase a home in California then there is no
      recourse from the lender unless fraud was committed in obtaining the home loan.
   4. If you loan was a refinance or a home equity loan then it will most likely contain a
      recourse clause, i.e., the bank can come after you for its losses on your loan.
   5. There is a company called Neighborhood Assistance Corporation of America,
      https://www.naca.com/index_main.jsp, that may refinance you out of your
      present mortgage at favorable rates. This is not a recommendation, just
      information.

We have found that most homeowners who are going to owe $100,000 more than their
home is worth decide to move on to a Short Sale.

If you decide to do a Loan Modification you can go directly to your monthly mortgage
statement and get the phone number for Customer Service and call and ask for the
Loan Modification Department. They will ask you some questions and then tell you to
send to them the following documents:
    1. FHLMC Form 1126 http://www.freddiemac.com/sell/forms/pdf/1126.pdf
    2. IRS Form 4506-T http://www.irs.gov/pub/irs-pdf/f4506t.pdf
    3. Monthly Mortgage Statement (All Loans)
    4. Copies of Default Notice(s)
    5. Hardship Letter
    6. Two Latest Paystubs (All Borrowers)
    7. Two Latest Bank Statements
    8. Last Two Years Tax Returns

You may decide that this process is too onerous and want help. FinaQuest does not
recommend any companies to complete this process.

The federal government has created a new program to assist in loan modifications. To
be quite frank it has come under some criticism (see HAMP, National Review 01-25-10).
The government regulations amending the CRA of 1977 that caused this mess have still
not been rescinded and may not be rescinded.
http://makinghomeaffordable.gov/modification_eligibility.html
Short Sales

 You may have some tax issues to deal with so you will need to contact your tax person
and get the information about your possible tax liability. Only a licensed tax person can
answer those questions.

Your Realtor will suggest the best Short Sale Processing company and they will inform
you of what documents they need to proceed. In the case of a Short Sale the bank will
determine what the final sales price is and they will do so with recourse or without
recourse, depending on which bank is involved. Recourse is an extremely important
issue and you do not want to treat it lightly.