Credit News

# Mortgage Calculator

## \$1,115.57 / Month

### Mortgages

A mortgage is a loan secured by a property usually a real estate property. A real estate mortgage usually includes the following key components:

• Loan Amount the amount borrowed from a lender or bank. The maximum loan amount one can borrow normally correlates with household income or affordability. To estimate an affordable amount, please use our House Affordability Calculator.
• Down Payment the upfront payment of the purchase, usually in a percentage of the total price. In the US, if the down payment is less than 20% of the total property price, typically, private mortgage insurance (PMI) is required to be purchased until the principal arrives at less than 80% or 78% of the total property price. The PMI rate normally ranges from 0.3%-1.5% (generally around 1%) of the total loan amount, depending on various factors. A general rule-of-thumb is that the higher the down payment, the more favorable the interest rate.
• Loan Term the agreed upon length of time the loan shall be repaid in full. The most popular lengths are 30 years and 15 years. Normally, the shorter the loan term, the lower the interest rate.
• Interest Rate the rate of interest charged by a mortgage lender. It can be “fixed” (otherwise known as a fixed-rate mortgage, or FRM), or “adjustable” (otherwise known as an adjustable rate mortgage, or ARM). The calculator above is only usable for fixed rates. For ARMs, interest rates are generally fixed for a period of time, after which they will be periodically “adjusted” based on market indices. ARMs transfer part of the risk to borrowers. Therefore, the initial interest rates are normally 0.5% to 2% lower than FRM with the same loan term. Mortgage interest rates are normally expressed in Annual Percentage Rate (APR), which is sometimes called nominal APR or effective APR. It is the interest rate expressed as a periodic rate multiplied by the number of compounding periods in a year. For example, if a mortgage rate is 6% APR, it means the borrower will have to pay 6% divided by twelve, which comes out to 0.5% in interest every month.

The most common way to repay a mortgage loan is to make monthly, fixed payments to the lender. The payment contains both the principal and the interest. For a typical 30-year loan, the majority of the payments in the first few years cover the interest.

### Costs Associated with Mortgages and Home Ownership

Commonly, monthly mortgage payments will consist of the bulk of the financial costs associated with owning a house, but there are other important costs to keep in mind. In some cases, these costs combined can be more than the mortgage payments. Be sure to keep these costs in mind when planning to purchase a home.

Because the recurring costs perpetuate throughout the lives of mortgages (exception being PMI), they are a significant financial factor. Property Taxes, Home Insurance, HOA Fee, and Other Costs increase with time as a byproduct of moderate inflation. There are optional inputs within the calculator for annual percentage increases. Using these wisely can result in more accurate calculations.

• Property Taxes a tax that property owners pay to governing authorities. In the U.S., property tax is usually managed by municipal or county government. The annual real estate tax in the U.S. varies by location, normally ranging from 1% to 4% of the property value. In some extreme cases, the tax rate can be 10% or higher.
• Home Insurance an insurance policy that protects the owner from accidents that may happen to the private residence or other real estate properties. Home insurance can also contain personal liability coverage, which protects against lawsuits involving injuries that occur on and off the property. The cost of home insurance varies according to factors such as location, condition of property, and coverage amount. Typically, the annual cost can range from 0.1% to 5% of the property value.
• Private Mortgage Insurance (PMI) protects the mortgage lender if the borrower is unable to repay. In the U.S. specifically, if the down payment is less than 20% of the property value, the lender will normally require the borrower to purchase PMI until the loan-to-value ratio (LTV) reaches 80% or 78%. PMI price varies according to factors such as down payment, size of the loan, and credit of the borrower. The annual cost typically ranges from 0.3% to 1.5% of the loan amount.
• HOA Fee a fee that is imposed on the property owner by an organization that maintains and improves property and environment of the neighborhoods that the specific organization covers. Common real estate that requires HOA fees include condominiums, townhomes, and some single-family communities. Annual HOA fees usually amount to less than one percent of the property value.
• Other Costs includes utilities, home maintenance costs, and anything pertaining to the general upkeep of the property. Many miscellaneous costs can be deceptively high and it is important to consider them in the big picture. It is common to spend 1% or more of the property value on annual maintenance alone.

While these costs aren’t contained within calculations, they are still important to keep in mind.

• Closing Costs the fees paid at the closing of a real estate transaction. It is not a recurring fee yet it can be expensive. In the U.S., even though not all are applicable, the closing cost on a mortgage can include attorney fee, title service cost, recording fee, survey fee, property transfer tax, brokerage commission, mortgage application fee, points, appraisal fee, inspection fee, home warranty, pre-paid home insurance, pro-rata property taxes, pro-rata homeowner association dues, pro-rata interest, and more. Sellers will share some of these costs. It is not unusual for a buyer to pay \$10,000 in total closing costs on a \$300,000 transaction.
• Initial Renovations Some buyers invest money into renovations, features, or updates before moving in. Examples may be changing the flooring, repainting the walls, or even adding a patio.

Besides these, new furniture, new appliances, and moving costs are also common non-recurring costs of a home purchase.

### Early Repayment and Extra Payments

For many situations, mortgage borrowers may want to pay off mortgages earlier rather than later, either in whole or in part, for reasons including but not limited to interest savings, home selling, or refinancing. Most mortgage lenders allow borrowers to pay off up to 20% of the loan balance each year but few may have prepayment penalties for one-time payoffs, mainly to prevent refinancing too soon (which will affect the lender’s profit). One-time payoff due to home selling is normally exempt from a prepayment penalty. The penalty amount typically decreases with time until it phases out within 5 years. Few lenders charge prepayment penalties regardless of home-selling or refinancing, but be sure to review the loan terms carefully anyway just in case.

Some borrowers may want to pay off their mortgage loan earlier to reduce interest. Typically, there are three ways to do so. The methods can be used in combination or individually.

1. Refinance to a loan with a shorter term Normally, interest rates of shorter term mortgage loans are lower. Therefore, borrowers not only repay their loan balances faster, but receive lower and more favorable interest rates on their mortgages. Keep in mind that this imposes higher financial pressure on the borrower due to higher monthly mortgage payments. Also, there may be fees or penalties involved.
2. Make extra payments the majority of the earliest mortgage payments will be for interest instead of principal on typical long-term mortgage loan. Any extra payments will decrease loan balances, therefore decreasing interest and pay off earlier in the long run. Some people form the habit of paying extra every month, while others pay extra whenever they can. There are optional inputs to include many extra payments, and it can be helpful to compare the results of supplementing mortgages with extra payments and without.
3. Make biweekly (once every two weeks) payments of half month’s payment instead Since there are 52 weeks each year, this is the equivalent of making 13 months of mortgage repayments a year instead of 12. Utilizing this method, mortgages can be paid off earlier. Displayed in the calculated results are biweekly payments for comparison purposes.

The Calculator has the tools to help evaluate the options. Please be aware that the rates on mortgages tend to be very low compared with other types of loans. Also, mortgage interest is tax-deductible, and home equity accumulated may be counted against borrowers when applying for need-based college aid. Be sure to consider comprehensively before paying off mortgage loans earlier.

# calculator mortgage

To use this calculator change the above fields as desired:
• Mortgage Amount: Enter your mortgage amountthis is the Principal Loan Balance
• Interest Rate (%): Enter the annual interest rate

CANADIANS:Add a C (e.g. 7.75C) to use a conversion factor to convert Canadian rates to a US equivalent to use in the calculations.

• Amortization Length: Years, typically 30 or 15 in US, 25 in Canada
• Starting Month Year: Select the starting month and enter the year
• Show full amortization table? No or Yes (This is a long table)
• Pre-payment method options:

None : No Prepayments

Monthly : Pre-pay a set amount each month

Annually : Pre-pay a set amount once each year

Bi-weekly A: 26 half paymts/yr – 2 half pre-paymts each 6 months

Bi-weekly B: 26 half paymts/yr – 1 full pre-paymt each 12 months

One Time : Pre-pay one set amount after a given # of months

• Prepayment Amount: Monthly/Annually/One-Time Principal Prepayment Amount
• Prepayment after month: One-Time Prepayment to be paid after payment number of months
• Display Using: HTML 3.0 Tables or Plain Text

# Calculator

Use our financial calculators to finesse your monthly budget, compare borrowing costs and plan for your future.

Select a product below to begin calculating:

## Other Rates

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# Mortgage Payment Calculator

Use our mortgage loan calculator to determine the monthly payments for any fixed-rate loan. Just enter the amount and terms, and our mortgage calculator does the rest. Click on “Show Amortization” Table to see how much interest you’ll pay each month and over the lifetime of the loan. The mortgage loan calculator will also show how extra payments can accelerate your payoff and save thousands in interest charges.

#### Amortization Table

Whether you’re buying a new home or refinancing, our mortgage calculator can do the math for you. Simply enter the amount, term and interest rate to get your monthly payment amount. If you’re refinancing, enter the current balance on your mortgage into the loan amount section and input the new term and new rate that you’ll receive. Then click on the amortization table to see how much interest you’ll pay over the life of the loan. Add extra payments to find out how they can put your payoff schedule on the fast-track and save you thousands.

Keep in mind that this calculator only calculates the mortgage payment. It does not include taxes, insurance or other fees included in the purchase of your home.

Loan amount: The amount of money you’re borrowing. It’s the cost of your new home minus the down payment if you’re buying or the balance on your existing mortgage if refinancing.

Interest rate: The exact rate you will receive on your loan, not the APR.

Loan term: The length of time you have to pay off your loan (30- and 15-year fixed-rate loans are common terms).

Amortization table: Timetable detailing each monthly payment of a mortgage. Details include the payment, principal paid, interest paid, total interest paid and current balance for each payment period.

Monthly extra payment: Extra amount added to each monthly payment to reduce loan length and interest paid.

Yearly extra payment: Extra amount paid each year to reduce loan length and interest paid.

One-time extra payment: Extra amount added once to reduce loan length and interest paid.

It takes less than 30 seconds to move toward homeownership. And it is free. Let us help you.

## Home Loans For Bad Credit

Are you wondering how to buy a home with bad credit? Do you know how to acquire a bad credit home loan? Thanks to the fact that they are government insured, the FHA (Federal Housing Authority) and FHA backed Mortgages, allow people to get home loans with bad credit; so you buy the home you ve been wanting. These “Bad Credit Mortgages” are not as expensive as some other home loans, and their relaxed qualifications help people every day stop being renters and become homeowners.

Most people consider owning a home at one point or another in their lives, but do not know what it takes to do so. What houses can I afford? How much is it going to cost? Do I have enough down payment? Will a bank lend to me? Perhaps you have gotten past that part and actually have gone to a bank to find you are not eligible for a home loan, but were not told why, or do not understand why. Then you re left with even more questions. Do I have bad credit? Do bad credit home loans exist? How can I get home loans for bad credit or even how to buy a home with bad credit? What is my debt to income ratio? What do I need to qualify for an FHA bad credit mortgage loan?

At Government Home Loans, we have answers and resources for every step in the home loan process, focusing heavily on FHA loans due to the relaxed guidelines and their ability to help the first time home buyer. Our goal is to give you a timeline and a plan to get you access to home loan that is both a safe, and responsible loan that you can succeed in.

We have highly trained loan specialists available to you, and we are committed to sharing all of our resources to get you into your own home with an FHA Mortgage. Whether you are a first time home buyer and are looking for home loans for people with bad credit, or have owned before but have been recently turned down, our specialists as well as many online resources can provide you the tools you need to attain your goals. Things have changed a lot, you can buy a home with bad credit now. Talk to one of our bad credit mortgage lenders or find the information that may help you right here on the website.

# Mortgage possible with credit problems

Fear of a loan denial has led some consumers with low credit scores to simply not bother applying for a mortgage. But, while you’ll still have to provide proof of your income and assets and an explanation of your low credit score, it is possible to get a mortgage with a low credit score from some lenders.

“Your credit score is a piece in the qualification puzzle, but it’s not the whole puzzle,” says Josh Moffitt, president of Silverton Mortgage Specialists in Atlanta.

## ‘Fair’ to ‘poor’ is considered a low credit score

There aren’t any hard lines between a “good” and “bad” credit score. The scores break down like this:

### Credit score

A number, roughly between 300 and 850, that summarizes a consumer’s creditworthiness.

The higher the score, the more able and willing a consumer is to repay a loan, lenders believe. The best mortgage rates and terms go to borrowers with credit scores of 740 and higher. Generally, a “low” credit score is in the “fair” to “poor” ranges below.

740 and higher = excellent

661 to 739 = good

601 to 660 = fair

501 to 600 = poor

## Borrowers’ credit scores are falling

Lenders in 2014 were approving more loans with lower credit scores. According to mortgage software provider Ellie Mae, 33 percent of closed loans in spring 2014 were for borrowers with a credit score below 700, compared with 27 percent a year earlier.

## Borrowers with low credit scores often get FHA loans

Lenders are typically more lenient with credit qualifications for borrowers who opt for government-insured Federal Housing Administration loans.

Carrington Mortgage in Santa Ana, California, accepts applications from borrowers with a credit score as low as 550 for FHA loans, with minimum down payments of 10 percent.

## Demand is there for low-score borrowers

“There’s a huge segment of underserved borrowers today,” says Ray Brousseau, executive vice president of the mortgage lending division of Carrington Mortgage Services. “In 2005, 1 out of every 7 loans were approved for borrowers who had a credit score under 630. By 2013, 1 out of every 500 borrowers had a credit score that low.”

## 3 things about getting a mortgage with a low credit score

• Lenders are becoming less strict about credit scores.
• Some lenders see a difference between irresponsible applicants and those who lost jobs.
• Proving a year of on-time rent payments could be helpful.

Brousseau says that Carrington has been able to offer loans to borrowers with low FICO scores because employees have experience in managing subprime loans.

“We invested in people with expertise in manually underwriting loans and making common-sense decisions about borrowers, and they’re joined at the hip with servicers who talk directly to borrowers and help them manage their loans,” Brousseau says. “Our loans are perfect for the group of people that got caught up in the recession and lost their job or had their hours or pay cut or had to move and take a loss on their home.”

## Automated and manual underwriting

Two methods that lenders use to approve or deny mortgage applications:

• Fannie Mae and Freddie Mac have software programs (Desktop Underwriter and Loan Prospector) that can automatically approve loans based on the borrower’s credit score, income, total debts and other criteria. That is automated underwriting.
• In other cases, the lender may approve loans based on the lender’s judgment. That is manual underwriting.

## Qualifying for a low-credit mortgage

Moffitt explains that lenders run loan applications through automated underwriting systems from Fannie Mae or Freddie Mac. The applications must meet the standards established by their investors.

“If a loan doesn’t make it through the automated system, you can look at it manually and find out why the credit score is low,” Moffitt says. “Sometimes investors will allow a loan to be approved with a low credit score but with other compensating criteria, such as having six months of cash reserves in the bank or no late payments for the past 12 months.”

## How to improve the odds of approval

Moffitt says you increase your chances of an approval if you can verify that you’ve paid your rent on time for the past 12 months and that you won’t have a payment shock on your housing payment.

“If you’re paying \$500 a month in rent, then we wouldn’t want your payment to go above \$750 if you also have a low credit score,” Moffitt says.

Another way to offset the impact of poor credit is to make a bigger down payment, particularly a payment of 20 percent or more. If you can only go from 3.5 percent to 5 percent for your down payment, Moffitt says, you’re better off keeping the extra cash in reserve.

## Explaining a low score

Borrowers with a lack of credit history and therefore a low score can sometimes overcome their score with nontraditional forms of credit such as utility and rent payments. If you have a long credit history and a low score, you’ll need to explain it.

Some of the common issues that can cause your credit score to drop but which lenders view as less risky are issues with a late medical bill or student loans, says Moffitt. He says a default on a car loan would be much worse than those financial issues.

## Lending is a judgment call

At Carrington, borrowers with a low credit score must go through an educational process to make sure they understand their loan.

“We make sure that if there’s a potential problem with the borrower, we won’t make the loan,” says Brousseau. “Just because FHA guidelines say a loan is permissible doesn’t matter because our underwriters will make decisions based on common sense.”

If you’ve got a low FICO score, consult with a few lenders to see if your reasons for your low score can be overcome enough for a loan approval.

# mortgage loan

Collateral. When reviewing collateral, lenders look at house value, down payment and property type.

Appraised value of the house. The lender wants to make sure that the value of your home would support the amount of your mortgage. Usually, the amount of your loan can be no more than 95 percent of the appraised property value or 95 percent of the sales price of your home, whichever is less.

The lender will arrange to have a professional appraiser estimate the market value of the house you plan to buy. The appraiser looks at what the home is worth today and how the neighborhood may affect future property value.

Down payment. Lenders usually expect you to make a down payment of between 10 and 20 percent of the house’s price and to pay closing costs, often three to six percent of the loan amount. There are many special programs for first-time home buyers and low- to moderate-income home buyers that allow a smaller down payment – as low as 3 percent, or even no down payment, in some cases. To know more, visit our page Types of Mortgage Loans. With the smaller down payment loans, however, borrowers are required to carry Private Mortgage Insurance.

Lenders may also verify the origin of your down payment.

Capacity. When looking at capacity, your income, debt, and cash reserves are verified. Supplying the lender with all necessary documents will significantly speed up the application process. All of these things can help the lender understand how well you might repay a mortgage loan. Lenders generally prefer that your housing expenses (including mortgage payments, insurance, taxes, and special assessments) not exceed 25 to 28 percent of your gross monthly income. Other long-term debt (monthly payments extending more than 10 months) added to your housing expenses should not exceed 33 to 36 percent of your gross monthly income. Click on How Much You Can Afford to Borrow for getting a more specific idea.

Credit reputation. Your credit history are considered when lenders are reviewing credit reputation. Lender orders a Credit Report, supplied by a credit reporting agency, on you to check your ability to repay a loan. If there any credit problems – a history of late payments, foreclosures or judgements, your lender may then ask you for a written explanation or clarification of any problems.

If you are denied a home loan, the lender is required to explain the reasons. It is important to understand why the loan was denied, because you may be able to find answers or alternatives that will satisfy the lender. For more information, visit our page If Your Loan is Denied.

If the application is found acceptable, the firm commitment is issued to the borrower and the lender prepares for the closing of the mortgage.

There are several federal laws which provide you with protection during the processing of your loan. The Equal Credit Opportunity Act and the Fair Housing Act identify a number of factors that are illegal to use in evaluating a prospective applicant’s qualifications: race, color, religion, sex, national origin, marital status, age (provided the applicant has the legal capacity to contract), source of income derived from public assistance, handicap, familial status (families with dependents under age 18).

The Fair Credit Reporting Act were designed to ensure fair and accurate consumer credit reporting.

Another consumer protection statute is the Real Estate Settlement Procedures Act. Under this act the lender within three days of receipt of the application must give the borrower a Good Faith Estimate of settlement costs, which lists the charges the buyer is likely to pay at settlement, and a Mortgage Servicing Disclosure Statement, which discloses to the borrower whether the lender intends to service the loan or transfer it to another lender. The Real Estate Settlement Procedures Act also allows the borrower to request the HUD-1 Settlement Statement that shows the actual settlement costs of the loan transaction one day before the actual settlement.

Under the Truth-in-Lending Act lenders within three days of receipt of the application must give the borrowers a Truth and Lending Statement, which disclosures the Annual Percentage Rate (APR) on the loan — a measure of the cost of credit, expressed as a yearly rate.

Go to Consumer Protection Laws page for further discussion of your rights under these acts.

While processing a loan many creditors use a system called credit scoring to estimate your creditworthiness. In credit scoring system statistical methods are used to determine whether to give you a loan. Using this method lenders can make decisions faster and more accurately.

Federal Trade Commission prepared the brochure to answer some questions about credit score system — Scoring for Credit. Based on how well you score, a creditor may decide to extend credit to you or turn you down. This publication illustrates how credit scoring system works.

Another publication, ‘Credit Scores’, written by the Federal Home Loan Mortgage Corporation (Freddie Mac) will acquaint you with available types of credit scores, FICO score, their accuracy and fairness.Though this brochure is intended for lenders mainly, it can be also interesting for borrowers.

Today an automated underwriting system is becoming more and more popular. It enables lenders to obtain a risk classification without traditional manual underwriting. Automated underwriting shrinks the mortgage approval process from weeks to minutes, saving borrowers time and money and eliminates much of the frustration and uncertainty involved in getting a mortgage. The objectivity of the system also assures consumers that their applications will be evaluated fairly.

To know more click on Automated Underwriting – article about Freddie Mac’s state-of-the-art automated underwriting service.

If Your Loan is Denied The most common reasons for loan denials

and corrective measures you can take.

Types of Mortgage Loans Review characteristics of all the basic loan programs available today.

# mortgage loans

\$0. NO UPFRONT FEES or POINTS ARE

PAID TO MEMBERS MORTGAGE*

*(the borrower must order / pay for their appraisal. A refund of \$350 max is paid at the closing of the loan)

Our Mortgage Loan Program does not charge any upfront fees such as an application fee, a credit report fee, a processing fee, etc. No borrower paid points or borrower paid broker fees are charged. This provides a significant savings to the union members. We are paid for our services directly by The Lender!

Our competitors collect from both you and The Lender. they just don’t mention that part. thus, not the same Savings!

The borrower is required per HVCC to order and pay for their appraisal. A refund is provided at the time of closing (\$350 max).

As in all mortgage loans, other costs do apply. Lender fees, Title Insurance fees, State/County related fees, settlements fees..etc.

A Summary of Mortgage Loan Closing Costs is Provided Below:

Members Mortgage Corp . was created in 1999, specifically to provide an honest and affordable Mortgage Loan Program to NYC ‘s Police and Firefighter Union Members and their families as a way of giving back to those who give so much of themselves. It was received enthusiastically by the union memberships and proved to be an immediate success. We were literally closing thousands of loans a year and the savings for the union members was staggering ! The popularity and integrity of the program was recognized by many and soon other unions were requesting the ability to provide the program to their memberships. Since then we have grown to over 150 unions participating in our program . and the program continues to Grow and Grow .

We have never waivered from our original mission of providing union members and their families a Honest Mortgage Program that has significant savings to them. To date, we feel quite proud of the fact that we have saved over \$50 million in mortgage and related cost for union members and their families. A truly remarkable feat !!

Help us to continue to save union members money on their mortgage loan by helping us to.

SPREAD THE WORD . TELL A FRIEND . POST INFO AT WORK !!

## We Are The Only “Union ONLY” Mortgage Loan Provder.

ALL UNION MEMBERS & THEIR FAMILIES ARE WELCOME. Active & Retired.

Buying a home is one of the biggest purchases most of us make. House hunting can be exciting and disappointing at the same time. Some people find the perfect home in three days, for others, it can take months.

We’ve seen it all. And we understand how you feel. Once you finally find the perfect home, let us help you quickly find the perfect mortgage.

A review of our Loan Programs appears on this website. Call or e-mail us and we’ll develop a personalized quote.

Are you already living in your dream home? Maybe it can be even dreamier with a lower monthly mortgage payment! Refinancing could be the way to go. Check it out with our Refinance Mortgage Calculator.

Or, try out our Debt Consolidation Mortgage Calculator to see if a home equity loan or second mortgage would work for you.

Buying a home is a big investment. We can be there with you every step of the way. Our company has been in this business for a long time, and we invite you to put our experience and expertise to work for you.

# How to Get a Mortgage Loan Modification

If you are a struggling homeowner trying to avoid foreclosure, a loan modification that lowers your monthly mortgage payment might be the perfect solution for your situation. Even though the process might seem intimidating, you can apply for and obtain a loan modification on your own without paying for assistance. Read on to learn more about how loan modifications work, how to apply for a modification, and how you can navigate the process on your own.

Loss mitigation in the mortgage business is a process where borrowers and their lender work together to prevent foreclosure. There are several different kinds of loss mitigation, such as:

(To get information about these and other options to avoid foreclosure, see our Alternatives to Foreclosure area.)

Perhaps the most sought-after form of loss mitigation is a loan modification.

## Understanding Loan Modifications

A loan modification is a written agreement between the borrower and the lender that permanently changes the original terms of the promissory note to make the mortgage payments more affordable. To reduce the monthly payment amount, the lender typically agrees to lower the interest rate and extend the term of the loan. The lender also normally adds any past-due amounts to the unpaid principal balance as part of the modification.

(Generally, lenders do not like to approve first-mortgage principal reductions as part of a loan modification. However, there are some programs under the Hardest Hit Fund that combine principal reduction assistance with loan modifications. The Keep Your Home California program does this. For more information on the different Hardest Hit programs, visit our Hardest Hit Fund topic page.)

## Different Loan Modification Programs

Depending on your situation and circumstances, there are several different loan modification programs you may qualify for, including:

• The Fannie Mae and Freddie Mac Flex Loan Modification program.
• A proprietary (in-house) loan modification.

## Loan Modification Problems During the Mortgage Crisis

During the mortgage crisis of the late 2000s, mortgage servicers commonly committed egregious servicing errors such as failing to handle loss mitigation applications appropriately. (A mortgage servicer is the company that collects monthly mortgage payments, tracks account balances, manages the escrow account, handles loss mitigation applications, and pursues foreclosure in the case of defaulted loans.)

Borrowers seeking loan modifications during this time almost always got the runaround from their mortgage servicer. It was next to impossible to talk to the same person more than once, paperwork got lost, and, worst of all, the servicer would keep the foreclosure moving forward while at the same time letting the borrower think that a loan modification was forthcoming (called dual tracking).

## Laws That Help Homeowners in the Loan Modification Process

As a result of the problems during the mortgage crisis, new rules and laws designed to protect homeowners in the loan modification process came about. For example:

• On January 10, 2014, new mortgage servicing rules designed to protect borrowers when it comes to mortgage loans and loss mitigation went into effect. Read more about New Federal Rules Protecting Homeowners With Mortgages.
• California passed the Homeowner Bill of Rights, which regulates how mortgage servicers handle loan modification applications. Nevada and Minnesota also passed similar laws.

Now, servicers generally try to work with customers who are facing financial difficulties to keep them in their home if at all possible. They have increased their personnel and streamlined the process to better keep up with increased loan modification requests. If you want a loan modification, it is easier than ever to navigate the process on your own since the loss mitigation process is much better regulated and structured than it used to be.

If you want a loan modification, the first thing you should do is contact your servicer s loss mitigation department (sometimes called a home retention department). You can typically find contact information on your monthly mortgage statement or on the mortgage servicer s web page.

### Single Point of Contact

One of the big problems in the past was that homeowners who called their lender to apply for a loan modification had to explain their circumstances repeatedly, often to several different representatives. Currently, in many instances, you ll be assigned one person to work with you through the process who will explain each step along the way.

On January 10, 2014, new federal mortgage servicing rules went into effect. Among other things, one of the rules requires continuity of contact when a homeowner seeks foreclosure alternatives. Under the continuity of contact rule, the servicer must assign a single person or a team of personnel to help if you inquire about a way to avoid foreclosure. (The continuity of contact rule does not apply to open-end lines of credit, reverse mortgages, qualified lenders under the Farm Credit System, any loan that is secured by a property that is not the borrower s principal residence, and small servicers and certain government agencies.)

Additionally, the Homeowner Bill of Rights in California and Nevada also requires mortgage servicers to appoint a single point of contact (or team) if a homeowner requests a loan modification or other foreclosure prevention alternative. The single point of contact must remain assigned to the account until all loss mitigation options are exhausted or until the account is brought current.

## The Loan Modification Application

To obtain a loan modification, you ll need to submit an application to your mortgage servicer. Often you ll need to provide:

• a completed application (including your personal information, mortgage information, property information, and so forth)
• recent paystubs (or a profit and loss statement if self-employed)
• bank statements
• tax returns
• income/expense financial worksheet, and
• a hardship statement or affidavit.

In most cases, you are better off filling out the application and gathering the required documents on your own rather than hiring someone to assist you. Here’s why.

Saves money. It is much cheaper to just do it yourself than paying someone to do the paperwork for you.

Scams abound. The majority of loan modification companies are scams. They will take your money and you ll get very little in return, certainly nothing that you couldn t have done yourself. These companies may tell you they are experts at negotiating a loan modification, but there is no trick to getting a loan modification. There is very little negotiating that occurs in the process. The lender has certain requirements that borrowers must meet in order to get a loan modification, and if you meet them, you will be given a modification.

(To learn about other common foreclosure scams, and how to avoid them, see our Foreclosure Rescue Other Scams topic area.)

Efficiency in responding to inquiries. If you work on the loan modification process yourself, you can respond to any inquiries or requests from the mortgage servicer in a timely manner. Loan modification companies often fail to respond to requests from the loan servicer, which can lead to the loan modification request being denied. Also, you are in the best position to respond to any inquiries because only you know all of the details of your particular situation.

## Getting Help

However, if you find that you are having difficulty understanding what you need to do to complete your application or are having problems dealing with your servicer, consider talking to an attorney or a HUD-approved housing counselor

# What will your mortgage payment be?

This mortgage calculator from LendingTree is an estimate only and is not intended to be interpreted as a firm offer to lend funds. Please contact LendingTree to find a lender to give a loan quote specific to your situation.

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