Randy Johnson, president of Independence Mortgage Co. in Newport Beach, author of “How to Save Thousands of Dollars on Your Home Mortgage” and a mortgage broker since 1983, answers questions…
Confusedaboutmods in Irvine asks:
Q. Why would I use a (hopefully) reputable attorney to work out a loan modification versus going directly to my mortgage holder, which is now Bank of America?
A. I had always thought that a third-party could not do anything that you couldn’t do yourself. But a title insurance employee said that they are doing the title work on modified loans and that some borrowers have used attorneys that have been effective. That said, I would want to exhaust all possibilities before I called an attorney.
The success rate seems to be about 1-in-5 get a modification but who knows what they get, usually a drop in interest rate. Dropping the balance you owe is not likely.
Stay away from the many “loan modification specialists” who are not attorneys.
(Blogger’s note: Private companies must get approval from the California Department of Real Estate to charge an advance fee for a loan modification. The DRE publishes a list of loan mod companies and people against whom it has issued a desist-and-refain order. Read it HERE. Lastly, attorneys can accept advance fees for loan mods, basically their retainer, without DRE approval. I have heard of both productive and unproductive attorneys and advise caution. Finally, I recommend checking the Web site of HUD to find a credit counselor approved by the agency to help people avoid foreclosure for free! Find a credit counselor HERE. Unfortunately, these nonprofits are swamped, but if you are in trouble it is worth a phone call.)
Darkstar in Orange asks:
Q. We purchased a home in November 2007 with zero down (probably one of the last loans of its kind) and currently have a fixed-rate mortgage at 6.5 % via a credit union. Given the significant drop in interest rates (and home values) since then, would it be possible to refinance our loan at a lower rate? Is it possible to refinance with the same lender (we really like the personalized service provided by our credit union)? Also, if a new assessment of the property (assuming it’s required for the refi) shows a drop in value (which it should), can this be a basis for lowering our property taxes?
A. Without any equity, you aren’t going to be able to refinance unless your loan is owned by Fannie Mae or Freddie Mac. Both have programs that will allow you to refinance but only if the loan is less than 105% of the value of the home. My guess is, however, that your home has gone down in value a lot more than 5%. Talk with your credit union and see if you can’t work something out with them.
As to property taxes, you can appeal your assessed value by using the appraisal. If you don’t get an appraisal because the refinance opportunity isn’t there, ask the Assessor’s Office anyway. They may give you a reduction based upon their estimate of your home’s value based upon activity in the area.
That’s it. If you want Johnson to answer a question, email it to Mathew Padilla at mapadilla(at)ocregister.com. Include your name or nickname and the city you live in — that information will be published with your question.
Johnson will answer up to three questions each week, so keep checking back for a response. If many questions are submitted, it could take a while to get a response, or he may never get to it. Also, readers keep submitting variations on the same question, which has already been answered: what to do when you can no longer afford your mortgage. I have decided not to publish most of those questions, because they are repetitive, although I appreciate the difficult situation many homeowners are in these days.
Read prior questions and answers by clicking on the headlines below…
- Answers for first-time home buyers
- Time to double-down on housing?
- Refinance to survive a cash-flow crunch
- Rainy day fund vs. lower mortgage payment
- Is ‘walking away’ from a home justified?
- Real estate investors get no sympathy
- The case for buying a home now
- Bigger home loans coming to O.C.
- A complicated mortgage that could fund retirement
- Loan doors open for serial housing investors
- Forget dodging refinance fees
- No job, no refinancing
- Avoiding a rate hit on an investment property
- Who qualifies for Obama’s mortgage refinance plan?
- Paying off a mortgage vs. refinancing
- Mortgage problems of the wealthy
- The skinny on 40-year mortgages
- Refinancing questions and answers
- How to buy with little money down
- Do banks renegotiate mortgages for ‘good’ borrowers?
- Is it time to buy a rental property?
- Caution urged on mortgages that fund retirement
- Refinancing can be tricky if your home was recently for sale
- Shopping for lowest rate is dumb way to get a mortgage
- Speedy mortgage payoffs could cost you
- Paying your mortgage may be the best use of your money
- A ‘good’ borrower these days is someone who…
- When insurers kill your mortgage application
- Mortgage insurance companies not giving breaks
Find out more about: MORTGAGE ANSWERS | MORTGAGE RATES | FORECLOSURES | HOME PRICES | INVENTORY | RENTS | FED |
Randy, very good suggestions and information. One other thing regarding re-assessment. The homeowner should ask for four (the amount required by assessor office) comparable recent “closed” transactions within his neighborhood in order to provide the assessor’s office proof that his property has gone down in value and should be re-assessed. Call your real estate neighborhood specialists and explain what and why you need the comps, they should be happy to comply.