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“Refinancing Upside Down Mortgage“
“Refinancing SECRETS for an Upside Down Home Loan that Banks Don’t Want You To Know because it will Cost them THOUSANDS of Dollars!”
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It is estimated that 1 in 10 homeowners with mortgages are upside down in their homes, as of March, 2008.
As alarming as that is, the projection is that as home values continue to plummet, 1 in 3 home owners will be upside down by the end of this year, 2008. Let me just take a moment to explain exactly what I mean when I say upside down. It means that you owe more than your home is worth. Another term for this situation is “underwater.”
A good example would be a friend of mine who has a house he built in Tampa, Florida, and has just moved into it from Long Island, NY. He owes $295,000 on it and the builder is now selling similar houses for $185,000. My friend is seriously underwater.
Not only that, his mortgage will adjust in a year to a number that will probably push him into foreclosure. He no longer wants the house. What he doesn’t know, is that neither does the bank! They do not want a house that is worth less than the financing on it sitting on their books.
Loss Mitigation can be his solution.
This is the process of mitigating or lessening the losses associated with assets, in this case homes.
It is a department in a bank and it is also the process of negotiating a solution that will mitigate losses for both the bank and the homeowner, typically allowing him to stay in the house so that it does not drag down the bank’s balance sheet.
Could my friend negotiate his own loss mitigation deal? Yes, he could also remove his own appendix, but the outcome in both cases would probably be disaster. Were he to call the bank, he would be ill prepared for what he will likely encounter.
First, he will have difficulty finding the right person to help him.
Second, if he eventually stumbled upon the loss mitigation department, they would probably not talk to him because he is not delinquent or in foreclosure and he would not get anywhere.
His best chance is to be represented by a loss mitigation professional negotiator.
This is someone, usually a former banking insider or mortgage broker, who is now working on the other side of the desk, helping those who are in trouble with their loans. He will know where the bodies are buried in the bank and will be familiar in many cases with the specific personnel in the bank’s loss mit department.
If the homeowner can show that his DTI, Debt to Income ratio, is under 50% now, and he has proved that he can make his present payments but would go to a 60% or higher DTI upon the reset of the loan; the loss mitigator is in a good position to negotiate a loan modification that would recast the loan without the scheduled increase.
Although the homeowner’s DTI is simply calculated by dividing his income by his total monthly debt load, the homeowner may include or exclude items or report them in a manner that will quickly get his proposal shot down by the bank.
Say he is paid weekly, bringing home $1,000/wk. He puts his monthly income down as $4,000/Mo.
In reality, there are 4.3 weeks in a month, so he is short changing himself by $300/mo. Not a big deal?
What about something as simple as reporting the cost of food for a family of four, for instance? The homeowner may report their actual figure of say, $800 month. He has no way of knowing that the bank is satisfied with a pro forma, $100/person/month figure for food. So now, he has short changed his income by $300/mo and overstated his expenses by $400/mo. Such a net swing of $700 month could easily push his DTI into the rejection zone.
The loss mitigator, on the other hand speaks the bank’s language, knows and understands their criteria and procedures, allowing him to help the homeowner tailor his situation to satisfactorily meet them.
The alternative to the bank is not a positive one.
The homeowner stops paying. They bring a foreclosure. The house does not sell at auction so they have to continue it on their books as a non performing asset which is a black mark on their finances.
It has been observed that the total cost to the bank to take a house back, in terms of lost interest payments, legal fees, administrative fees, maintenance, repairs, taxes, insurance, broker fees, etc; including the loss on the house when it is eventually dumped on the market at a fire sale price, could easily total $50,000 or more!
It just makes more dollars and sense to have the homeowner in the house, making payments he can afford while keeping a non performing loan off their books. That is the outcome of a successful loss mitigation.
WATCH MY NEW VIDEOS ABOUT UPSIDE DOWN MORTGAGE REFINANCE
HERE IS A LINK TO A SITE POSTING ALL THE PHONE NUMBERS AT VARIOUS LOSS MITIGATION DEPARTMENTS AT BANKS – This information is very useful
Copyright 2008 Bill Young
Bill is the Director of a nationwide loss mitigation network. If you are a real estate professional looking to augment or replace your regular income, the loss mitigation industry could be your answer. More information Click here: http://Loss-Mitigation.Info or call Bill at 646-961-3818