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When facing the loss of their house, short sales are a method that some people choose to use in order to stop a foreclosure from taking place. This tactic takes place when it seems likely that the bank will lose less money than it would with a foreclosure.

By definition, a short sale means that the home is being sold for less than is owed on the mortgage. In evaluating the pros and cons of a short sale, some of the cons include: having to pay taxes, insurance, and mortgage payments on the property until the house is sold; competing with other bargain basement-priced homes in the area; getting a negative mark on your credit report; losing all of your investment in the property; and the possibility of still owing money towards the mortgage of a home that you no longer own or live in. After dealing with all of these problems associated with a short sale of your house, you still have to find a place for you and your family to live. While a short sale may be one of the options you have, we believe that there are better options out there for you.

If you are facing a similar problem, you should consider a home loan modification. Many California companies offer loan modifications, but not all companies have the benefit of experienced, licensed attorneys. The Feldman Law Center specializes in California loan modifications, which can help you avoid a foreclosure, bankruptcy, or short sale on your home. An attorney can help secure the most advantageous deal for you, your family, and your property.

Loan modifications are one of the best options to choose when facing the loss of your home. When comparing a home loan modification to a short sale, you could potentially avoid all of the cons of a short sale. You would stay in your home, keep the investment you’ve made in the home, and avoid the hassle and expense of completing a short sale and finding new accommodations.

Most California loan modifications include lowering or fixing the interest rate of your mortgage, which means that monthly payments would be stabilized to an amount that is more attainable for you. It can also include reducing the principle balance that you owe or forgiving some of your mortgage payment defaults or missed payments on fees. A modification completed by one of our loan modification attorneys can include any or all of the above features. The main advantage of having an attorney complete the negotiations with a lender is that our attorneys can achieve better results than you can achieve alone, and can achieve them more quickly.

The attorneys of The Feldman Law Center are experienced negotiators of home loan modifications. Our founder, Steven C. Feldman has been licensed by the State Bar of California for over 25 years. Free quotes and consultations are available for you to help you make the most of your current situation. Contact us today and let us help you with your home loan modification.

Feldman Law Center – As the foreclosure backlog grows, a new class of American homeowners as described by a recent article in the Washington Post is growing by the month. These are homeowners that have fallen into a financial limbo where they are badly behind on payments, but their lenders have not yet foreclosed on the home. “I have even begged them for a foreclosure,” delinquent mortgage-holder Charlotte Jensen said. Behind on payments and not willing to wait for an eviction notice, she filed for bankruptcy, and left the home. Nearly a year later, still with no further payments, Bank of America has yet to take back the home.

The total of the backlog is estimated at one million borrowers, sits on top of the one million foreclosure actions that had been taken this year through May. It presents a major obstacle for any kind of rebound or stability in the country’s hard hit real estate markets. It’s also an obstacle than can drive the market lower and then keep it there indefinitely. Banks are currently doing the best they can not to flood the market with foreclosures but each sale, when one occurs, is counted as a “comp” for appraisal purposes. Everything similar gets indexed to the comp until the next sells at a lower price. For evidence of properties being kept off of the market one need only look at one of highest foreclosure states in the country. California had 111,000 foreclosed properties which could have gone to auction in May. Of that number, only 17,000 went to auction and only 2,000 sold. If those kinds of numbers repeat for just a few months, the state will have a backlog that will take years to unwind. Properties that aren’t sold on the way down would most likely be sold as prices stabilize or start to bounce back, which would mute any recovery.

“Lenders are having an immensely difficult time handling the capacity. They are torn between loan modification, short sales, foreclosures, and they are finding they can’t do all these things at once, and do them well, so we’re seeing a lot of things falling through the cracks,” said Howard Glaser, a housing industry consultant and a housing official during the Clinton administration.
Mortgage lenders and investors in that scenario would be looking at more losses as a result of the mortgage crisis. “It just means foreclosure rates are going to keep rising,” said Patrick Newport, an economist for IHS Global Insight. Without an end to the downward spiral in prices any kind of meaningful recovery in the economy will be impossible.

Another issue is the growing conflict of interest between mortgage investors and the companies that service the loans for them. In many cases, what is good for the servicers is bad for the investors and vice versa. For instance, in a home loan modification versus foreclosure situation, the servicer will favor the modification because it keeps payments and fees they can charge on them alive. The mortgage investors, seeing the potential for a decrease in cash flow as a result of the modification, will favor foreclosure as a means of getting their money out of the deal. The resulting stalemate can cause a house to sit in limbo while the servicers and lenders decide a course of action. For the homeowners in the situation, the stalemate can be beneficial as it allows them to stay in the house but the stress of knowing that an eviction can come at any time is tough to deal with.

While some of the backlog reflects the inability of lenders to keep up with the sheer volume of delinquent properties, another reason is an intentional slowdown in the pace of foreclosures as government and industry try to work with borrowers who want to stay in their homes. Fannie Mae and Freddie Mac, the government-run mortgage financing companies, put a temporary moratorium on foreclosures late last year, some states imposed moratoriums, and many of the country’s largest lenders voluntarily participated as well. The extra time gave lenders time to see how the guidelines of the Obama Administration’s “Making Home Affordable” would work and which borrowers could be helped by modifying their current mortgages under the plan. Many of those moratoriums started expiring at the end of the first quarter of this year, and foreclosures have been setting records on a monthly basis since then.
With potentially millions of foreclosed homes on the market and more coming every day, Prices have been hit across the country. The prices for existing homes fell another 16% in May versus the prices one year prior.  The growing backlog of homes in limbo indicates that foreclosure rates are likely to increase dramatically during the second half of this year and into 2010. Some estimates are calling for foreclosures to reach 2.4 million by year end. Bob Bellack, chairman of Zetabid, which auctions foreclosed properties, said “Prices will fall to the point where you have equilibrium, and it won’t reach that until there is no longer this foreclosure overhang.”  
Financial firms that carry mortgages or mortgage-backed securities on their books are scrambling to stem past and anticipated losses with any means possible. Whether a sign of desperation or not, mortgage investors have thrown their support behind  the Hope for Homeowners plan, a leftover from the Bush Administration which was considered an absolute flop the first time around. Intended to help over 400,000 homeowners at its outset, the plan originated only one loan. If the economy doesn’t turn, and without some sort of government assistance, continued foreclosures will result in continuing rounds of losses for investors.

Being in limbo has allowed some homeowners the time to save money while not making mortgage payments and take action through the home loan modification process to save their homes from foreclosure. In general, however, statistics don’t bode well for homeowners once they start missing payments. According to a March report from NeighborWorks America, a large housing counseling group, 60 percent of homeowners go into foreclosure after missing more than four payments.
Normal protocol is for the foreclosure process to start after the third payment has been missed but now it’s common for a foreclosure process to take nine months or more to get started, said Guy Cecala, publisher of Inside Mortgage Finance. “No one is in a rush, lender-wise, to deal with the property,” he said. “If you have to sell at a loss, why rush?”
Another protocol has lenders writing down the value of the home six months after an owner stops making payments, but the total loss is not recorded until the property is sold in foreclosure, said Mark Zandi, chief economist of Moody’s Economy.com. “Some may feel that the property is worth more than the market can bear at this time, and they are willing to wait until the market improves”, he said. “They don’t want to sell it into a completely depressed market.”

The typical foreclosure process varies by state and has been slowed down by the constant incoming volume. The timeline of the process is also dependent on who actually owns the mortgage and whether a bankruptcy has been filed by the homeowner. One of the biggest issues in the process now is that the phase preceding eviction, sale at auction, isn’t happening. Lenders, considering their workload and the costs of each foreclosure, aren’t eager to start a process which isn’t likely to be seen through to completion so limbo is the next best option.  
“During that period, where the property is in limbo, until there has been a sale of the property, the homeowner is still the owner, technically,” said John Rao of the National Consumer Law Center. Despite being seriously delinquent, homeowners can apply for a home loan modification to stay in their homes, even if they were turned down previously. Success after being turned down can be achieved if the homeowner has been hired into a new job, is generating more income, and/or by hiring legal representation to renegotiate the terms of the existing mortgage. The odds of approval are also increasing due to lenders’ reluctance toward taking more properties into foreclosure. Whatever they may have thought about home loan modifications before, at this point they’re a better option than either foreclosure or sitting in limbo.

At the Feldman Law Center, our loan modification attorney team keeps their eye on all mortgage loan modification news in order to properly inform and education every client we work with.  Our California loan modification company works hard to provide top notch advice as well as a skilled legal ability to get you the best loan modification agreement possible.

Recently, the federal government has been paying far more attention to the loan modification process than they have in the past.  The Federal Deposit Insurance Corporation (FDIC) and the Federal Housing Administration have rolled out plans over the last year to combat the rising foreclosure proceedings.  The FDIC loan modification program and the FHA loan modification program have received some heavy criticism from large financial institutions such as Moody’s Investor Services.  In a recent Moody’s report, the FDIC loan modification program may eventually reduce cumulative losses for mortgage loans involved in the subprime mortgage crisis.  The FDIC loan modification program is designed to help more people get quality loan modifications by creating a streamlined framework with key incentives, including:  a loss-sharing arrangement for existing investors; and a thousand dollar stipend for every successful loan modification.

Ultimately however, Moody’s feels that the participation in the FDIC loan modification program might be limited, which weakens the effectiveness of the program.  The FDIC loan modification program will have a lesser cumulative impact on the losses suffered by banks, lenders and homeowners.

A California loan modification can be had by utilizing the skills of a California loan modification attorney.  At the Feldman Law Center, our loan modification law firm can provide the kind of unique experience and highly sought after knowledge necessary to procure a loan modification.  Working with any lender or federal agency involves lots of red tape and bureaucratic road blocks; but with a skilled loan modification attorney, you could overcome those challenges.

Many people are interested in how a loan modification can help them change their financial situation and keep them in their house for the long haul.  Throughout California, foreclosure signs are popping up in neighborhoods all over the state, and even in some areas that never thought it would happen to them.  Even such neighborhoods as Beverly Hills, Bel Air and Walnut Creek are suffering from the subprime crisis, and everyone in the state is suffering as a result.  California unemployment has reached double digits, and it could get much worse.

A loan modification is an agreement between the debtor and the mortgage company to renegotiate the terms of the mortgage loan.  This is done so that the borrower can have an affordable, reasonable monthly payment, allowing them to keep making payments over the long haul.  A California home loan modification attorney can help the borrower negotiate with the lender, arrange the loan modification application and communicate with the bank or lender.  With a loan modification attorney at your side, you can get the best loan modification possible and keep yourself and your family in your home.