Robert Rinehart asked:




There is a new type of Home Loan Modification coming soon to your city. This one promises to be easier, faster, and more beneficial to you. You won’t need to worry about HAMP or hardship letters or 31% debt-to-income ratios any more. The new home loan modification is a reduction of the principal balance of your loan and it’s a direct result of the dramatic revelations of lender mistakes and abuses that have come to light in September and October of 2010.

The biggest mistake lenders made was using MERS to register the sale of loans in the secondary market. We have coined the term the “MERS Charade”. Using MERS or the “Mortgage Electronic Registration System”, lenders bypassed the legally required process of tracking sales of mortgages to a new owner. The seller of a mortgage is legally required to file a “Notice of Assignment” at the county recorder’s office. But lenders realized the cost of these recordings would reach several hundred million or perhaps billions of dollars. So, they created MERS to keep track of mortgage sales. This, however is illegal, and has resulted in foreclosures being vacated by the courts.

If your loan was registered in MERS, it’s likely you can get a principal reduction on your loan. There is no “qualifying” for a MERS principal reduction as there was with a federally sponsored HAMP loan modification (HAMP stands for Home Affordable Modification Program and is the federal government program for interest rate reduction loan modifications). You simply negotiate with your lender to have your principal balance reduced.

There is no more hardship requirement, no more income qualification, no more “trial” modification. You don’t have to wonder if your lender is going to arbitrarily deny you for reasons you can’t fathom. It does help the negotiation process if you are underwater to some extent, but this is not required. Also, you don’t have to be behind in payments. You simply approach your lender with your negotiation request and find out what they’ll be willing to negotiate.

Of course, it’s never going to be that easy. Your lender isn’t going to just roll over right away. You have to be persistent and present your situation from a legal perspective – make them see that you know the law and why your loan is no longer secured by your home. It’s only when faced with a credible threat of lawsuit that they will be willing to negotiate. The good news is that the lenders know they have no recourse now and are more willing than ever to salvage something out of what is so obviously a terrible situation for them.

If you don’t possess the legal expertise or time and effort needed to see your home loan modification negotiation to the end, you can get help from reputable loan modification companies. Look for a loan modification company such as Loan Modification USA that has a 100% money-back guarantee for their work and will let you see the status of your negotiation in real-time using a web portal. You can also click the following link to find out if your loan is a candidate for a mers loan modification resulting in a principal reduction on your home.

Tyrone

Loan Modification Attorney asked:


A Home Loan Modification can help you stop foreclosure and stay in your home. But if you’re like most homeowners, you’re probably wondering how it will affect your credit, and whether in a good or bad way. Unfortunately, there’s no single answer—it all depends on how far behind you are and the kind of mortgage loan modification you’ll be granted.

Best-case scenarios



Technically, since you’re not borrowing any money, a home loan modification won’t hurt your credit score. If you’re paying less in interest, you have a smaller debt burden. And since most lenders prefer an interest rate reduction, there’s a pretty good chance that a Home loan modification will improve your credit score.

The implications are even better if your lender forgives part of the principal, although this is less common. If they write off $50,000 from your loan amount, it will show up on your report as a smaller loan, which can increase your credit score.



The lender factor

Unfortunately, it doesn’t always happen that way. It also depends on how your lender reports the home loan modification to the credit bureaus. Many of them will consider it paid for less than the original amount owed, which will count against your score. If you’re already in foreclosure, the impact on your credit can be substantial. Of course, compared to a short sale or a foreclosure, a Mortgage Loan Modification is still the best way to maintain your credit standing.

Tax implications



One of the early problems with Loan modification is that the amount forgiven is usually taxable. That means if your debt is reduced by $50,000, the IRS views it as income and imposes the corresponding tax. This can catch homeowners off guard during tax season, as many of them don’t know the tax implications at the time of the modification.

To avoid such incidents, the IRS announced in 2007 that Loan modification would no longer be classified as “prohibited transactions.” This applied to all loans originated from January 2004 to July 2007, the peak of the sub-prime boom, and those due to adjust from January 2009 to July 2012. If your mortgage falls under these categories, you won’t have to file a 1099 declaring the change as taxable.

A loan modification is much like going to court: you can save your money and get a court-appointed lawyer, or you can invest in professional representation and get the best mortgage assistance. Your loss mitigation won’t happen overnight, but if with a capable Loan Modification Attorney, you can be sure you’re in good hands.



AUBREY