Ask The Loan Mod-Short Sale Guru

The last several months I have had the opportunity to help numerous readers with their Loan Modifications, Short sales and even Refinancing their existing mortgages. Many of them just needed answers to their questions and some reassurance that whatever their situation, things can be worked out. Most of them had questions regarding the Loan Modification program for primary homes as well as investment homes. Many are concerned that their monthly payments may go up since they do not have fixed rate loans and are looking to refinance into fixed rate loans. Other wish to know how a loan modification or a short sale would affect their credit.

It is heartening to see that we have so many qualified, intelligent people in the community who are thinking ahead to when the economy will start heating up and when interest rate hikes may affect them. Though many of our readers do not qualify for the loan modification program because their income is over the limits of the program (and not because they make too much money, since nobody, except the likes of Bill Gates, makes too much dough!), we have a few people who have poverty level incomes and our hearts go out for them. Many others realize that their homes values are so far below the existing debt on the property and their incomes reduced such that the best option for them is a short sale. Being a Realtor and loan officer, I have been in a position to help such readers too.  In today’s column I am repeating two questions that readers have asked frequently when calling me.

Question:   Mr. Loan Mod Guru, Do I qualify for the Home Affordable Loan Modification Program?

Loan Mod Guru:

You qualify for the Loan Modification, if you answer Yes to these five questions:

Ø  Is your home your primary residence?

Ø  Is the amount you owe on your first mortgage equal to or less than $729,750?

Ø  Are you having trouble paying your mortgage?
For example, have you had a significant increase in your mortgage payment OR reduction in your income since you got your current loan OR have you suffered a hardship that has increased your expenses (like medical bills)

Ø  Did you get your current mortgage before January 1, 2009?

Ø Is your payment on your first mortgage (including principal, interest, taxes, insurance and homeowner's association dues, if applicable) more than 31% of your current gross income?

Question:   Mr. Loan Mod Guru, What are the various reasons or circumstances that may qualify me to obtain a Loan Modification?

Loan Mod Guru:

The following are some reasons that may qualify you to obtain a Loan Modification:

1. I lost my job and now am unemployed.

2. My employer reduced my pay. Overtime was eliminated, regular hours or base pay reduced.

3. I am underemployed. My new job pays less than my old job.

4. A borrower or primary wage earner in the household has died.

5. I am self-employed and have endured a decline in business earnings.

6. I am now divorced or I am now separated

7. A serious illness has impacted a household member.

8. I have suffered a permanent or short-term disability

9. I or a family member have suffered a disability or illness that results in an increase in uninsured major medical expenses.

10. I am overextended on all of my credit because I have been using credit cards, home equity loans, or other credit to pay my monthly Mortgage payments, medical obligations, food expenses or utility bills.

11. I am not working or receiving any income.

As you see this is a very open and all encompassing list that covers most situations that may lead a homeowner to become delinquent on their mortgage payment. Therefore, whatever your circumstances, you should try to apply for a loan modification. It must be noted, however, that just because you are upside down on your mortgage and your home value has gone down, that in itself does not qualify for a loan modification. The crucial factor here is hardship. However, you may still qualify for the Home Affordable Refinance program. Feel free to call me with any questions you may have regarding Loan modifications, Short sales, home buying and selling etc. I will be only to happy to assist you.

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Sources: US Dept. of Treasury and MakingHomeAffordable.gov. Farhad is a Realtor and Loan Officer, specializing in Short Sales and Loan Modifications. If you would like your personal questions on Loan Modifications to be answered in this column, please email your questions to [email protected] or contact Farhad Patny at 623 297 4448