Loan Modification and Short Sales

Loan Modification
The recently announced Federal Loan Program has two parts -- loan modification and loan refinancing. On loan modification, this is aimed at folks that are in dire straits. Their monthly mortgage payment far exceeds 31 percent of their pre-tax monthly income. It might be 50, 60, 70 percent of their income; it's not sustainable to keep paying that. This provides government subsidies and incentives to financial institutions to chop down their interest rate, possibly lower their principal, even stretch out the mortgage to bring the monthly payment down to 31 percent of their pre-tax income,"
The other group are those who are current on their payment. Their monthly payment is 31 percent or less of their pre-tax income. They'd like to refinance to take advantage of a 5 percent interest rate, but they can't because the value of their home is at or slightly below what their mortgage is. The mortgage might be slightly more than the value of the home and shrinking. They'd like to refinance, and this plan can help them.

Are you or someone you know trying to modify a loan? If so, contact our Massachusetts Real Estate Attorney today.

Loan Modification FAQ Frequently Asked Questions and Answers from HUD (U.S. Department of Housing and Urban Development).

Short Sales
I cannot make my mortgage payment. What can I do besides going bankrupt or having my home foreclosed? For owners who can no longer afford to keep mortgage payments current, there are alternatives to bankruptcy or foreclosure proceedings. One of those options is called a "short sale." If you've stopped making mortgage payments or you are headed into default because you cannot refinance or the lender doesn't want to negiociate, you have three options. You can sell the property before foreclosure is final, or give a deed-in-lieu of forecloseure to the bank or let the property be foreclosed. Buyers and investors often try to negiociate with the bank on short sales before the home foreclosure is complete, especially if the home is worth less than the outstanding mortgage balance.

Do you or someone you know need information about a short sale? If so, contact our Massachusetts Real Estate Attorney today.

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