Sacramento Real Estate Views

Your Questions Answered!

“Are lenders making loans on lower priced homes?”

I got this question from Debbie in Cameron Park this week and I thought it was a great question.  My initial reaction is that I didn’t see why lenders wouldn’t make loans on these lower amounts.

I called my friend Tim Clark at Capitol Mortgage and my friend at Masters Team Mortgage, Stephen Hart.  They both have closed loans in the lower price ranges within the last two weeks.  Tim closed a $49,000 note and Stephen a $79,000 note.

So yes, it was confirmed through my favorite lenders, loans are being made on lower loan amounts.

“Are lenders modifying loans?”

Because I’ve done articles on loan modification success stories, I get calls every so often regarding whether or not I coordinate loan modifications between borrowers and lenders.  I do not help with the loan modification process but  because I get questions, I called Hope for Homeowners.org to find some answers.  Here is what I’ve been told:

1) If you’re not currently behind on your mortgage, your lender, generally, will not consider you for a loan modification. I know this doesn’t seem to make sense but this is what I’ve been told.

2) Lenders are not modifying principal loan amounts.  They are adjusting interest rates and restructuring loans but, from what I’ve been told, getting a principal loan amount reduction is rare.

My view is that this is the only valid modification tool.

3) If you don’t have the income to sustain your restructured payment, they lender won’t grant the modification.

4) The goal of the lender is to get your payment to 31% of your gross income.

5) “Strategic defaults” are beginning to increase nationwide. A strategic default means the homeowner is so far underwater that they don’t see their value coming back and just walk away from their homes regardless of their ability to make their payment. I’ve been hearing stories of this happening throughout the Sacramento region from many different sources.

6) 50% or more of restructured loans are re-defaulting within the first year of the modification.

7) Don’t call a third party to help with a loan modification until you talk to Hope for Homeowners.org. Although most of the shady loan modification scams have been shut down, they are still some out there.  Help for Homeowners.org is free and is working directly with the lenders to modify loans.

Loan modifications are happening throughout the nation and it is possible to get one. However, with perhaps as high as 45% of homeowners underwater in California (and getting worse), without a principal loan amount reduction most loan modification efforts will not be long term solutions.

Of the 500,000 homeowners that have been given trial loan modifications under the “Home Affordable Modification Program” only 5, yes just 5, have been given principal loan amount reductions.

Please call me if you have any questions you’d like answered.

Thanks for visiting!

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Tags: home loans sacramento

This entry was posted on Friday, October 9th, 2009 at 8:49 am and is filed under Your Questions Answered!. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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