The Federal Open Market Committee voted to leave the Fed Funds Rate unchanged today within its target range of 0.000-0.250 percent.  The Fed also reiterated its plan to support the mortgage market to the tune of $1.5 trillion.

In its press release, the FOMC noted that the economy may still be contracting, but that it’s not happening with the same speed as in prior months.  Household spending is stabilizing and financial markets are “easing”.

Nevertheless, threats to the recovery are everywhere with the following items on the Fed’s short list:

• The growing ranks of unemployed workers
• The reduction of housing wealth nationally
• Reduced inventories and investment from business

Furthermore, the FOMC fingered today’s inflation levels as too low to support economic growth.  This justifies the Fed’s plan to hold the Fed Funds Rate near zero percent “for an extended period”.

For home buyers and refinancing homeowners, today’s press release was not favorable.

After the Fed’s announcement, stock markets rallied on the idea that the worst of the economy really is over and that led to a broad bond market sell-off.  Mortgage rates spiked in response, adding as much as 0.125 percent, in some cases.

The FOMC’s next scheduled meeting is June 23-24, 2009.

Source
Parsing the Fed Statement
The Wall Street Journal Online
April 29, 2009
https://online.wsj.com/public/resources/documents/info-fedparse0904.html

Congratulations! Your loan modification is almost done. Here are just a few tips to wrap up the process.

You’ll receive a loan modification packet from your bank that looks very similar to loan documents. Review them to ensure the following terms are what you agreed to:

• Interest rate
• Interest rate reset cap
• Term of modification (how many years)
• Monthly payment
• Good faith payment due
• New principal balance of your loan

If all of these are in good shape you’ll need to:

• Sign the documents in the presence of a notary
• File a copy for yourself
• Wire good faith payment funds to the bank via the wiring instructions they provide (they will not accept a personal check)

Once that’s all done your loan modification is complete. Congratulations! You made it.

Related Posts in the Loan Modification 101 Series

• Loan Modification 101- The Basics
• Part 1- Loan Modification 101 – How to start the loan modification process
• Part 2- Loan Modification 101 – Doing your homework
• Part 3- Loan Modification 101 – Determining if you qualify for a loan modification
• Part 4- Loan Modification 101 – Tips for qualifying for a loan modification
• Part 5- Loan Modification 101 – Negotiating new loan terms
• Part 6- Loan Modification 101 – Finalizing your loan modification

Stay tuned to this blog for more great real estate, mortgage and loan modification advice. Thanks for reading and please share this series with friends and family who may need this help.

Courtesy of Morgan Brown, founder of Blown Mortgage.

If you’ve gotten this far, congratulations! It means you’ve been approved as a loan modification candidate and the bank has or will be making you an offer very soon. This post will cover some ways to negotiate with your lender to get the best possible modified terms for your new mortgage.

What to expect from your bank offer

If the bank does approve you for a home loan modification there are a few constants that you must be aware of:

• The bank will not write down the principal balance of your loan, they will adjust your interest rate to lower your payments, but you’ll still owe the same amount on your mortgage.
• The bank will not waive late payments. These will usually be added to your principal and tacked on the back of the loan.
• The bank will require a good faith payment ranging from one to two month’s mortgage payment as a sign of good faith that you’re committed to the mortgage.
• The bank will demand that you have the ability to afford a reasonable market interest rate as part of your modification. (You won’t be negotiating for 1% when the going rate for a 30-year fixed is 6.25%.)

Continue reading →

So far we’ve discussed the basics as it relates to getting a loan modification. Now we’ll talk about a few tips that will help you qualify for a loan modification. These tips are centered around your hardship letter and the monthly expense worksheet.

The hardship letter

Called an LOE in the biz (letter of explanation) this letter is your explanation of why you believe you qualify for a home loan modification. Remember these facts when writing your hardship letter:

Banks want to work with people that:

• Are credit-worthy and have a good payment history
• Have been in their home for a long time
• That have been impacted by an unusual adverse event
• Have good potential to keep earning their current level of income
• Have good potential to pay back the mortgage
• Are likely not to go in to default after modification

Banks don’t want to work with people that:

• Have been chronically late in making mortgage payments
• Have lived in their home less than a year
• Are a poor credit risk
• Have lost their primary source of income
• Are likely to go in to default after modification

You want to write your hardship letter with these facts in mind. A good hardship letter includes:

• An explanation of the event that caused you to fall behind on your mortgage (or if you’re current why you’re requesting a modification). This should be positioned honestly as a one-time setback that is in the past.
• These can range from your adjustable rate mortgage resetting, to an illness now recovered, to a job loss that has been replaced by a new, stable and similar paying position. These are all one-time events that don’t impact your ability to pay a reduced amount moving forward.
• A statement of your desire to stay in the home and make paying the mortgage a priority.
• A statement of why your situation was temporary and one-time.
• A statement of why your situation is improving.

If you’d like a free hardship letter simply subscribe to Blown Mortgage’s Loan Modification Tips email list.

Be brief and to the point. We don’t need a novel, just a straightforward and accurate letter that states your willingness to stay in the home and the freak nature of the event that caused you to request a loan modification.

Continue reading →

So far in this series we’ve talked about the process of loan modifications, how to get started and how to collect the information you need to accurately complete your monthly expense worksheet. The monthly expense worksheet is going to be used by your lender to determine if you qualify for a loan modification or not. Therefore this is an extremely important step that must be taken with care. Once you submit your monthly expense worksheet it becomes part of your file and is very hard to change it once submitted. Take your time and make sure it is correct!

Tip: Never lie on your monthly expense worksheet. Loan fraud is a federal crime. Knowingly submitting false information will jeopardize your modification application and may subject you to legal action from your lender.

Continue reading →