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savehomeusa.com
195 Posts |
 Posted - 02/20/2009 : 12:36:55 AM
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Hello all,
I wanted to get everyones experience and input on doing principal reductions on loans when doing loan modification. I manage a large loan modification and full service loan mod servicing company in California - Save Home USA. Following is my experience with principal reductions
1. Ocwen Servicing knocked off 30% off the principal balance of the 2nd mortgage for few of my our clients.
2. Countrywide announced on their website that they will reduce principal on some first mortgages. Announcement was made in December. I have not heard that they done even one. Apparently investors started suing them.
3. Wachovia recently announced that they will start reducing principal on certain loans. Again, I have not seen any document supporting this.
All the input will be welcomed
Boris Dorfman
Regional Manager
www.savehomeusa.com
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HELGALOANS
10 Posts |
Posted - 02/20/2009 : 12:47:58 AM
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| since ive merged with a attorney ive had better success. |
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savehomeusa.com
195 Posts |
Posted - 02/20/2009 : 12:54:29 AM
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quote:
Originally posted by HELGALOANS
since ive merged with a attorney ive had better success.
Be specific. Which banks were you guys able to do. Please provide links for documents.
That is my problem. Everyone is claiming that they are doing principal reductions on loan modifications, clients are paying money upfront, but noone does them.
Boris Dorfman
Regional Manager
www.savehomeusa.com |
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ML
5117 Posts |
Posted - 02/20/2009 : 05:36:56 AM
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quote:
Originally posted by savehomeusa.com
quote:
Originally posted by HELGALOANS
since ive merged with a attorney ive had better success.
Be specific. Which banks were you guys able to do. Please provide links for documents.
That is my problem. Everyone is claiming that they are doing principal reductions on loan modifications, clients are paying money upfront, but noone does them.
Boris Dorfman
Regional Manager
www.savehomeusa.com
I think you answered your own question.
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Quicksilver
6303 Posts |
Posted - 02/20/2009 : 06:44:40 AM
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| I would think if lenders were able to handle the modifications correctly (instead of our current 50-60% back in default rate) along with principal reduction would be much more smarter. |
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savehomeusa.com
195 Posts |
Posted - 02/20/2009 : 09:56:27 AM
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quote:
Originally posted by Quicksilver
I would think if lenders were able to handle the modifications correctly (instead of our current 50-60% back in default rate) along with principal reduction would be much more smarter.
Well, 50-60% re-default rate is an old figure. See, what most lenders would do about 6 months ago, they would add delinquent amount back to the principal and come up with a repayment plan, where payment is actually higher (due to the fact that principal balance is higher, nothing else changed). In reality, this is not a loan mod. This is what the economy has to avoid - postponement of inevitable foreclosures.
Now, the banks do realistic loan modifications or don't do them at all if they cannot produce significant savings.
As far as principal reductions, I have a feeling that someone has done them with Wachovia, at least. I know it's possible on 2nds, but as a settlement/buyout.
I still have faith in some of our collegues that they actually do work after collecting money upfront. Which, in most cases in California, by the way, is illegal. |
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savehomeusa.com
195 Posts |
Posted - 02/20/2009 : 11:59:54 AM
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I posted this thread yesterday and today, got another settlement on the second with GMAC. They offered to take $3,000 in lieu of entire 2nd. I am looking for specific examples like this. I will post this agreement to our website shortly. You will find it here:
http://www.savehomeusa.com/lender.html
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cblaskoski
1066 Posts |
Posted - 02/20/2009 : 12:13:50 PM
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One of my clients got a letter from HomeQ who had a joint marketing venture with a broker. They were advertising refinances with short payoffs. So I am doing the new loan instead and I have a request for a payoff that is 50k less than what is owed. They said they will accept it.
Principle forbearance or principle deference are common with Wachovia and Indymac. Wachovia/World had a pilot program called project Green Earth that I referred a lot of wachovia people to. They got refinance paperwork that would break them into two loans... one at 90% of market value as low as 2-3% fixed, and the 2nd was silent for 3 years, meaning no payments; then it was 0% interest for the remaining 27 years.
Indymac's look like step mods with a big balloon payment. They will just defer a big chunk of the principle or in effect create a silent second that will have no interest or payments. It is an effective way of lowering the payment without having to create negative interest. |
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cblaskoski
1066 Posts |
Posted - 02/20/2009 : 12:15:17 PM
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2nd mtgs in collections will often times settle for as low as 10% of the balance
I got an offer from National city 2nd mtg to settle for 65% and from Wells fargo for 80%
sorry I'm not going to take the time to track down the paperwork, and upload it to the web but I have no reason to make anything up, I'm not selling or advertising anything. |
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savehomeusa.com
195 Posts |
Posted - 02/20/2009 : 12:29:26 PM
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Thanks for the input, cblaskoski.
No, I don't need paperwork, I need something of substance like you provided. I just don't like posts like: "My success rate went up ones I merged with an attorney"
Yeah, I too noticed that lenders like to sell their 2nds to collection agencies lately. I would wait until they settle for under 20 cents on a dollar. Good information on Wachovia and others. This makes sense where they would break down the loan into 2 portions.
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cblaskoski
1066 Posts |
Posted - 02/20/2009 : 1:00:14 PM
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| People seem to speak in generalities a lot when this side of the biz is very specific and the devil is in the details. |
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NobleHouse
618 Posts |
Posted - 02/20/2009 : 2:17:58 PM
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| It's not hard to get a principal reduction on 2nds. One of our agents negotiated his own with CW paid $5800 to wipe out a $61,000 2nd lien. Ocwen I was helping my uncle I was able to get it down 50% off 111k at 2% P&I after they offered to modify 3.95% 5 yr IO for the full principal he was about to accept it too. 1sts are a little more complicated, it helps to understand how interest rates work and have access to comps or if you're feeling lazy even zillow is good enough. |
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savehomeusa.com
195 Posts |
Posted - 02/20/2009 : 2:26:38 PM
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| We were able to reduce Ocwen to 70% and have client continue paying. Never seen it done on the first. We do BPO's on every deal that we submit to the lender for a mod.I agree, seconds are doable. |
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NobleHouse
618 Posts |
Posted - 02/20/2009 : 2:39:31 PM
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| It took us a few nights to figure out the dti and NPV requirements to use for leverage. The tricky part is remembering which lender does what. Helped out a few of our friends and family. This information loan mod companies rarely share. I can talk to a loan mod solicitor ask him a few simple questions and I can tell instantly if he knows what he's doing. |
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savehomeusa.com
195 Posts |
Posted - 02/20/2009 : 4:11:22 PM
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| Yes, unfortunately, most do not know what they are talking about, even inside the banks. It took us a year to develop some contacts at some banks and learn about some programs. But this is all changing and there are dozens of lenders and hundreds of investor guidelines out there. |
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NobleHouse
618 Posts |
Posted - 02/20/2009 : 5:16:47 PM
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| You read my mind. Alot of agents in the bank have no idea quick to deny a request to get you off the phone. |
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ashley4see
9 Posts |
Posted - 02/20/2009 : 5:19:51 PM
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Office: 949.294.1463
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BMill
689 Posts |
Posted - 02/20/2009 : 5:34:06 PM
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Have a client - home for sale; got offer. No response from bank yet as to short sale approval. Client REALLY wants to stay in the home if the principal balance were reduced.
Short sale vs. short pay refi.
Any success with Chase in getting short pay refi. Borrower has good job, some assets. |
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savehomeusa.com
195 Posts |
Posted - 02/20/2009 : 5:39:27 PM
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quote:
Originally posted by BMill
Have a client - home for sale; got offer. No response from bank yet as to short sale approval. Client REALLY wants to stay in the home if the principal balance were reduced.
Short sale vs. short pay refi.
Any success with Chase in getting short pay refi. Borrower has good job, some assets.
Well, short payoff refi is different then principal reductions on loan modifications. No way they will get a principal reduction on a mod. Short payoff refi can be possible with FHA Hope program, but I am not an expert on it. From what I understand it's a pain in a rear and it's full doc and a lot of criterea has to be met. You have to talk to a good FHA mortgage broker.
As far as a loan mod with Chase it is very possible. Just got a mod on one of our clients from Chase today. New term is 5.0% fixed and amortized over 40 years. We have done lower then that in the past. This is the most recent one. |
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BMill
689 Posts |
Posted - 02/21/2009 : 10:53:56 AM
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| Anyone else??? |
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savehomeusa.com
195 Posts |
Posted - 02/21/2009 : 3:06:49 PM
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quote:
Originally posted by BMill
Anyone else???
Just had a collegue in my office, he brought me a mod that he did for his client with Wachovia under new guidelines. The loan was broken into 2 parts - 1st part is the appraised value, 2nd part is overage. Overage was fixed for 30years with at 0% interest. Principal was deffered for 3 years and then repayment would start over remaining 27 years.
1st was fixed for 30 years at 4.25% fully amortized plus .5%/year MI. They basically internally refied first into an FHA loan.
This loan was not done by us, but by our collegue. We bounce ideas back and forth on what works with other professionals in the industry. |
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savehomeusa.com
195 Posts |
Posted - 04/14/2009 : 10:20:48 AM
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| Great news!!! Just got two loans with WAMU/Chase approved for a loan modification. Rate was significantly reduced and the upside down portion of the loan (Negative difference between the loan amount and the appraised value) was deferred indefinitely at no interest. So my client went from $950K+ negative amortization loan to about $600K at 3% interest only for the first 3 years. $350K was deferred at no interest rate. Another client got similar terms; deferment amount was much lower, though. |
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projam
165 Posts |
Posted - 04/14/2009 : 10:56:54 AM
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| The problem with the modifications is simple. It does not help the borrower in any way. Lets say I purchased a home for 260,000 four years age. Today it is worth 175,000 I am 85,000 under. What sense is it for me to agree to a modification where I still have to pay all the principal, even with some at no interest? I will never be able to recover anything in thirty years even if I sell!! isn't it better if I just let the house go and wait two years to start over? With the present modifications it is a win win for the banks and a losing situation for the borrower |
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savehomeusa.com
195 Posts |
Posted - 04/14/2009 : 11:05:51 AM
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You sound like the bank owes you something. You did sign the note at $260K and owe this entire amount at the original terms. Come on, you are a mortgage agent, you should know better then this.
It's a "Costco Mentality" - buy ****, use it and then return it. People should start taking responsibility for their actions.
Loan modification is merely a courtesy for the client and a mechanism for the banks to mitigate their losses. It is a great solution for all involved, if done properly by the banks.
Principal deferrement option sounds like a fair solution for all parties involved. It would be ridiculous to forgive principal for most people, especially those that refinanced and took cash out. |
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projam
165 Posts |
Posted - 04/14/2009 : 11:12:46 AM
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| It is a business. Who takes the loss? The market like here in FL is 50-70% under. Why should the borrower take a hit? let it be shared!. Remember over the life of the loan an average borrower pays 3x purchase price of home! Should the lender reduce the principal he still will not loose in the long run at worst break even. Remember some of these lenders are accessing govt (taxpayers) funds at 0-.05 interest payments |
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cblaskoski
1066 Posts |
Posted - 04/14/2009 : 11:50:31 AM
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wachovia has a new program called MAP and they will reduce principle by 20%
I gopt a few done already. Also I have had citi drop principle on 1st mtg bu over 100k on 2 occasions. They have a program for this, just ask. |
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savehomeusa.com
195 Posts |
Posted - 04/14/2009 : 12:09:12 PM
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quote:
Originally posted by cblaskoski
wachovia has a new program called MAP and they will reduce principle by 20%
I gopt a few done already. Also I have had citi drop principle on 1st mtg bu over 100k on 2 occasions. They have a program for this, just ask.
Thanks for the input, Chuck. I've done deals with Wachovia where they deffer some of the principal with no interest, but have need seen them reduce the principal completely. What is the criteria, where they pick-a-pay? Thank you.
How about Citi? Was this on regular ARMs/Fixed? I haven't had many files with Citi and haven't had much success.
Thank you for you input. |
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eddieinab
835 Posts |
Posted - 04/14/2009 : 12:24:24 PM
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How long did it take to get the one from Chase?
quote:
Originally posted by savehomeusa.com
quote:
Originally posted by BMill
Have a client - home for sale; got offer. No response from bank yet as to short sale approval. Client REALLY wants to stay in the home if the principal balance were reduced.
Short sale vs. short pay refi.
Any success with Chase in getting short pay refi. Borrower has good job, some assets.
Well, short payoff refi is different then principal reductions on loan modifications. No way they will get a principal reduction on a mod. Short payoff refi can be possible with FHA Hope program, but I am not an expert on it. From what I understand it's a pain in a rear and it's full doc and a lot of criterea has to be met. You have to talk to a good FHA mortgage broker.
As far as a loan mod with Chase it is very possible. Just got a mod on one of our clients from Chase today. New term is 5.0% fixed and amortized over 40 years. We have done lower then that in the past. This is the most recent one.
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cblaskoski
1066 Posts |
Posted - 04/14/2009 : 12:40:07 PM
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i wish it was simple and there was a way to know when you could qualify, just know that it helps to keep asking the lender if they have a program that would reduce the principle, even if you keep getting no's one day you will get a yes.quote:
Originally posted by savehomeusa.com
quote:
Originally posted by cblaskoski
wachovia has a new program called MAP and they will reduce principle by 20%
I gopt a few done already. Also I have had citi drop principle on 1st mtg bu over 100k on 2 occasions. They have a program for this, just ask.
Thanks for the input, Chuck. I've done deals with Wachovia where they deffer some of the principal with no interest, but have need seen them reduce the principal completely. What is the criteria, where they pick-a-pay? Thank you.
How about Citi? Was this on regular ARMs/Fixed? I haven't had many files with Citi and haven't had much success.
Thank you for you input.
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