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Loan Modification Tips and Tricks to Deal With Your Lender (Page 1 of 3)
Loan Modification Tips and Tricks to Deal With Your Lender By Moe Bedard of www.LoanSafe.org
Are you having trouble with your mortgage? Has it adjusted and you cannot afford the new payment? Were you placed into a bad loan and you can’t refinance into a good one?
The first thing that a homeowner should do is identify that the mortgage on their current property is a lawful one. Meaning that there are no Truth in Lending Act Violations or RESPA violations and there wasn’t fraud involved on behalf of the lender or broker that originated your loan. When you are trying to stop foreclosure, you need to have as much ammo as you can to go up against your lender.
With that said, let’s go over some essential tips that might help you save your home.
1 Homeowner Tip = Have an experienced mortgage attorney examine your loan documents for these potential violations.
2 Homeowner Tip The homeowner needs a complete written life of loan history to see all the bogus charges and fees included in their mortgage balance. Also, the homeowner should make sure that any inflated appraisal and/or loss of property value is calculated into the workout.
Red Flags and Things to Look Out For in Your Loan:
Start by comparing the loan you got with the one you thought you were getting. Are the terms the same? That is, is your Annual Percentage Rate (“APR”) the same as the one you were quoted? Are your total monthly payments the same as you were told they would be? Is there a prepayment penalty, and if so, were you told about this prepayment penalty?
If you have refinanced your primary residence, that is, the home your currently live in, then the first thing you should look at is the “notice of Right to Cancel” which is also called the Three Day Right of Rescission. You usually has three days after signing loan documents to change your mind and cancel the loan.
The borrower must be told of this right in writing.
If the creditor fails to properly provide notice of this right to cancel, the right of rescission may be extended for up to three years.
When the right is extended for three years you can rescind the loan at any time before three years, meaning that the loan is treated as if it never existed. Essentially, you become entitled to all profits made by the creditor as a result of this loan. This means that the creditor must refund all interest paid, all closing fees, all broker fees, and even pay for your attorney fees. As you can imagine, this amount can be quite significant.
The extended right of rescission is a powerful tool to help borrowers who have been victims of predatory lending, and helping our clients exercise this right is often the first step in holding a creditor responsible for illegal behavior.
If it is determined that no laws have been violated on your mortgage, then it’s time to approach your lender for a possible loan workout or loan modification.
Homeowner? Get Higher Loan Amounts On Any Loan Type
If you are a homeowner you can easily get loans that require collateral and thus obtain advantageous terms on your loans. However, not everybody knows that being a homeowner will also guarantee you better loan terms on other loan types including unsecured personal loans. But most importantly, whether you want a secured or unsecured loan, you will be able to get significantly higher loan amounts thanks to home ownership.
Homeownership represents a significant risk reduction for the lender even if the assets are not used as collateral for the loan. Thus, anyone who is a homeowner will find in lenders a better disposition to negotiate loan terms and will be able to obtain more advantageous terms on loans including higher loan amounts without having to overpay for them.
Homeownership and Risk
Homeownership and risk are two concepts that are related. The risk implied in any financial transaction will depend on the applicants creditworthiness and on other factors too. One on these factors is the applicants ability to repay the loan which is determined by the income and all the applicants assets that can be eventually sold to use the money to repay the loan.
Thus, being a homeowner greatly reduces the risk involved in any financial transaction, even if the property or properties are not used as collateral for that particular loan. This is due to the fact that regardless of the use of the properties, they are still unofficially guaranteeing repayment of any applicants obligations because there are legal processes other than repossession that can force the borrower to sell the property to repay the loan in the event of default.
Risk And Loan Amount
We have analyzed the fact that homeownership and risk are related, now we will go a step forward to see how risk and loan amount are related. Actually the risk involved in the financial transaction determines most of the loan terms. The loan amount is definitely not the exception. If the risk is higher, the lender will prefer to lend the least money possible in order not to risk too much on the financial transaction.
Thus, a lower risk will imply that the lender will be willing to lend a higher loan amount as this will increase his profits without too much risk of default. Since the risk can be pondered in terms of money, the higher the loan amount lent, the higher the risk. But the opposite is also true: the lower the risk implied (due to other factors like homeownership) the higher the loan amount that can be lent.
Conclusion
From the above two considerations, one can infer that homeownership implies a lower risk in any financial transaction regardless of the use of the property as collateral of the loan or not and that this risk reduction affects the loan terms in a positive way. Thus, due to the risk reduction produced by homeownership, the applicant can get lower interest rates, longer repayment programs, lower monthly payments and higher loan amounts. This last consideration is the logical consequence of the whole analysis and explains the reasons of the articles title.