Hello All!
Welcome to the FIRST EDITION of our new blog series: Successfully Modifying Your Mortgage.
And so, our company’s evolution continues. After nearly twenty years (32 years collectively) of negotiating Short Sales, engaging in homeowner advocacy, and assisting distressed homeowners in just about every way imaginable, I’ve been told that we must start blogging. We spend 60% of our time counseling distressed homeowners and we’re passionate about what we do. My team insists that such knowledge and passion has to be shared on a larger platform. With that in mind, treasured reader, please be patient as we make our first foray into the blogosphere. Does this blogging thing require some type of license? Should it? (Incidentally, since this blog represents a joint effort, we’ve chosen a pseudonymic byline, F.R. Res, i.e., First Residential Real Estate Services).
The objective of this blog is fairly simple. We want to empower struggling homeowners with the information they’ll need to successfully modify a mortgage, lessen financial stress and improve their overall quality of life.
According to the Bureau of Labor Statistics, the average American family spends 31% – 39% of their gross income on housing. This figure (as a percentage) tends to be lower for higher income families and higher for lower income families. It makes sense when you think about it. A family with gross earnings of $6,000 per month and a $2,000 mortgage payment is allocating 33% of their gross income to housing. Another family earning $5,000 per month with a $2,000 mortgage payment is spending 40% of their monthly gross income on housing. Both families, depending on debt commitments and credit rating, could qualify for the $2,000 mortgage, but in either instance it’s probably their largest monthly household expenditure – by far. Sadly, for reasons too numerous to outline here, many of the folks reading this blog are paying 50%, 55% or even 60%+ of their monthly gross income toward housing.
In light of that, if we can help lessen a family’s largest monthly expense, the month gets off to a much better start! Imagine if a $2,000 adjustable rate mortgage was reduced to a $1,584, fixed rate payment. You would never again experience the fear of a possible payment increase (not to mention receiving the equivalent of a $5,000 annual raise). Stable, affordable housing leads to a stronger financial footing and less uncertainty. Folks this means LESS STRESS. Suddenly everything else becomes a little easier and a little better. Perhaps you could give up that part-time job. This may mean more patience with your kids and more quality time with your spouse. You get the drift.
And just how are we planning to accomplish this? How is our approach different from what you’ve been trying in the past few months (or years)? We’re glad you asked. Our Blog will focus on the Loan Modification process from the bank’s perspective. There is no shortage of horror stories and there are plenty of places to go online if you want to berate your bank. It feels good to vent and everyone wants a sympathetic ear – understood. But ultimately what you’re seeking is a written commitment from the bank that allows you to comfortably keep your home. Essentially, you want PAYMENT RELIEF. Who has the power to grant what you desire? Your bank. So if the bank has the authority to extend the relief needed, it might be helpful to start thinking like a banker. (Remember, you can always put on your “I Hate Banks” tee shirt after you’ve gotten your Loan Modification). Now take a deep breath. Okay, here’s the question: Why is it in the bank’s best interest to Modify your mortgage (i.e., lower your payment)? What’s in it for them? Try your best to come up with something other than a lower note equals a stronger, better performing loan, because it’s easier for you to pay – or they should not have been selling those types of loans anyway. Let’s seriously ponder the question. Granted, this requires a change in mindset, but again, from the banker’s perspective, why should the bank give you what you want? Mull this over for a while and we’ll pick up here in the next blog. (And we promise that future blogs will be shorter).
See you next time!
-F.R. Res
