Loan Modifications Info

Loan Modification & Debt Relief

I have had some success in helping homeowners getting their loans modified. If you are interested in this option, please contact me right away. Remember: Even hard-working people can encounter unforeseen situations which may affect their ability to pay their mortgage in a timely manner. Many issues can be contributing factors, such as temporary job loss, medical illness or injury, marital difficulties, unforeseen repairs or high utility rates, tenant problems, or even a death in the family. Just one of these situations can have a direct bearing on one´s ability to make their mortgage payments.

· The Mission:

We are dedicated to assisting distressed homeowners by identifying and implementing the best available loss mitigation option to prevent foreclosure. Following a thorough analysis of each situation, we work with homeowners and their lenders to come up with the appropriate loss mitigation solution, whether it is reinstating the mortgage, a forbearance agreement, a loan modification, a repayment plan, a deed in lieu of foreclosure, or a short sale agreement. We work diligently on behalf of the homeowner to negotiate and secure a fair agreement with their lender.

· Loan Modification FAQ’s:

Following are some definitions and information about the world of loss mitigation and loan modification
that readers may find useful. My team and I believe in clarity and uncovering and exploring the
mortgage modification process.

· Loss Mitigation Definitions:

Loan modification: A new mortgage rate, time frame, or other terms and conditions are arranged for an
existing loan.

Lien modification: The mortgage lender modifies the existing loan, making it possible for the borrower
to qualify for refinance with a different lender.

Short sale: The mortgage lender allows the house to be sold at a price lower than the mortgage owed
and forgives the borrower the balance of the debt. This is used as a last option to avoid foreclosure
when other avenues are not feasible.

Deed in Lieu of Foreclosure: When a house in saleable condition has been on the market for at least
30 days without selling, the bank may accept the deed to the house in lieu of foreclosure and forgive
the balance of the debt.

·Frequently Asked Questions:

What changes occur within the mortgage, with a loan modification solution?

A variety of things can occur with mortgage modification. A variable rate may become fixed.
An interest rate may be lowered, the time period for payment may be extended, or a combination
of these arrangements.

How do Banks / Lenders perceive Loan Modification? Would they rather Foreclose?

Banks DO NOT prefer foreclosure to a reasonable, workable loan modification. Contrary to public image, banks are not looking to scoop up all the homes they can find. They have more real estate in their portfolios than they can handle. The average foreclosure costs the mortgage lender $50,000 and in today´s economic market the number of foreclosures is growing at an alarming rate. It is almost always in the lender´s best interest to participate in a loan modification program.

I´m a home owner. How do I get involved with mitigation services?

That´s the easy part. Contact me and we will fill out the proper forms for a prompt review of your case.

·Benefits of Loan Modification:

We believe that loss mitigation and loan modification solutions are, in almost all cases, preferable to foreclosure and bankruptcy, for the mortgage lender, as well as the borrower. Loan modification benefits are many and include:

Borrower Benefits

 

• No harm is done to the home owner´s credit rating.
• Homeowner´s avoid foreclosure & can sell the home later on if they choose for a good value.
• Loan modification does not affect the neighborhood home values.
• Mortgage debt is “forgiven” instead of settling through stressful, and sometimes embarrassing,
  legal proceedings.
• Loan terms are modified to work within the borrower´s financial means.
• The loan modification process is faster with a lot less red tape to deal with.
• Families get to remain in their cherished homes and neighborhoods.

 

 

· Loss Mitigation:

Here´s how the Loss Mitigation Process works:

 

• We review the borrower´s situation via a ?Snapshot´ of information the borrower has submitted. (What are the current realities and what is feasible for this home owner?)
• From our predetermination analysis of the home owner´s data, we recommend mortgage loan modification and other loss mitigation options to the borrower.
• When the borrower decides upon a course of action, we craft a borrower financial outline in great detail for presentation to the loan servicer.
• We actually mediate a loan modification program directly with the mortgage lender on behalf of our borrower clients.

 

 

Loss mitigation outcomes may include:
Loan rate modification
Mortgage principle reduction
A new fixed rate loan
Partial debt forgiveness with short sell
Lien modification
Decreased monthly payment

More and more smart lenders are participating in loan modification and loss mitigation programs that help borrowers to remain responsible homeowners. We often present clients for loan modification assistance well before foreclosure becomes an issue. The best time for borrowers to consider mortgage loss mitigation is when the loan is just starting to become problematic.

· Mortgage Forgiveness Debt Relief Act

What is the Mortgage Forgiveness Debt Relief Act of 2007? The Mortgage Forgiveness Debt Relief Act of 2007 was enacted on December 20, 2007 (see News Release IR-2008-17 ). Generally, the Act allows exclusion of income realized as a result of modification of the terms of the mortgage, or foreclosure on your principal residence.What does that mean? Usually, debt that is forgiven or cancelled by a lender must be included as income on your tax return and is taxable. The Mortgage Forgiveness Debt Relief Act of 2007 allows you to exclude certain cancelled debt on your principal residence from income. Does the Mortgage Forgiveness Debt Relief Act of 2007 apply to all forgiven or cancelled debts? No, the Act applies only to forgiven or cancelled debt used to buy, build or substantially improve your principal residence, or to refinance debt incurred for those purposes. What about refinanced homes? Debt used to refinance your home qualifies for this exclusion, but only up to the extent that the principal balance of the old mortgage, immediately before the refinancing, would have qualified. Does this provision apply for the 2007 tax year only? It now applies to qualified debt forgiven in years from 2007 through 2012. If the forgiven debt is excluded from income, do I have to report it on my tax return? Yes. The amount of debt forgiven must be reported on Form 982 and the Form 982 must be attached to your tax return. Do I have to complete the entire Form 982? Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Adjustment) , is used for other purposes in addition to reporting the exclusion of forgiveness of qualified principal residence indebtedness. If you are using the form only to report the exclusion of forgiveness of qualified principal residence indebtedness as the result of foreclosure on your principal residence, you only need to complete lines 1e and 2. If you kept ownership of your home and modification of the terms of your mortgage resulted in the forgiveness of qualified principal residence indebtedness, complete lines 1e, 2, and 10b. Attach the Form 982 to your tax return. Where can I get this form? You can download the form at www.IRS.gov, or call 1-800-829-3676. If you call to order, please allow 7-10 days for delivery. How do I know or find out how much was forgiven? Your lender should send a Form 1099-C, Cancellation of Debt, by January 31, 2013. The amount of debt forgiven or cancelled will be shown in box 2. If this debt is all qualified principal residence indebtedness, the amount shown in box 2 will generally be the amount that you enter on lines 2 and 10b, if applicable, on Form 982. Can I exclude debt forgiven on my second home, credit card or car loans? Not under this provision. Only cancelled debt used to buy, build or improve your principal residence or refinance debt incurred for those purposes qualifies for this exclusion. If part of the forgiven debt doesn’t qualify for exclusion from income under this provision, is it possible that it may qualify for exclusion under a different provision? Yes. The forgiven debt may qualify under the “insolvency” exclusion. Normally, a taxpayer is not required to include forgiven debts in income to the extent that the taxpayer is insolvent. A taxpayer is insolvent when his or her total liabilities exceed his or her total assets. The forgiven debt may also qualify for exclusion if the debt was discharged in a Title 11 bankruptcy proceeding or if the debt is qualified farm indebtedness or qualified real property business indebtedness. If you believe you qualify for any of these exceptions, see the instructions for Form 982. Is there a limit on the amount of forgiven qualified principal residence indebtedness that can be excluded from income? There is no dollar limit if the principal balance of the loan was less than $2 million ($1 million if married filing separately for the tax year) at the time the loan was forgiven. If the balance was greater, see the instructions to Form 982, page 4. Is there anything else I need to know before filing? Yes. Because the Mortgage Forgiveness Debt Relief Act of 2007 was passed so late in the year, the software systems used by tax preparers and at the Internal Revenue Service needed to be updated to accept the revised Form 982.

If you would like more information, please contact me.

Bob Phillips, of Realty ONE Group, 949-643-2100,  Email: BobPhillipsRE@gmail.com