Obtaining a mortgage modification is probably a good idea. Whether or not you are financially needy and
have trouble paying your mortgage, people who live in the greater Metropolitan
New York area have likely paid a very high premium for their primary residence
if they bought in the years 2002 through 2008.
From my point of view, if you are a middle class individual (if you
are rich, you probably have already telephoned your local experienced, seasoned
attorney about this issue and don't need to read this), paying $350,000 through
$725,000, say, for a house, even at a mortgage rate of 6.00%, is a very large
portion of your income. In fact, it is
such a large portion that the Obama HAMP (making home affordable) plan is
designed for relief of those homeowners who have paid a premium for living the
American dream, in real property to which they hold title.
For those who live in expensive housing, the likely result
in that they are paying more than 36-40% of their income for the mortgage, PMI,
insurance, and property taxes. However,
the remainder of that income is nevertheless alot of money so that they don't
feel the "pain" of not meeting their other monthly obligations. Say they live a relatively simple lifestyle
and depend upon cable, cell phone, gym membership, LIPA of $200 monthly, car
payment of about $300. They may have the
disposable income available to enjoy life, and feel they do not need to take advantage of the HAMP program.
Nevertheless, the HAMP program is for them, even if they
feel financially comfortable. Outside of
the greater New York Metropolitan area, you are not supposed to be paying over 40%
of your income on mortgage, PMI, insurance, and property taxes; this is
considered "not affordable" and not compatible with the middle class
way of life. The HAMP program is a gift and is free money for you. For those who have a political bent, think of
it as welfare for the upper middle class.
Even though the HAMP program puts political pressure on the banks to
give these homeowners a break in the mortgage rate (frequently lowering the
mortgage below 5%!!), the government will help defray some of the losses the
banks will experience.
Next up, I will analyze the nuts and bolts of how the banks
analyze your income, ability to pay, and the manner in which they determine
whether they will lower your mortgage. Untangling
the HAMP rules is not for the weak-willed!!
Finally, the government tells you that you should not pay an
expert to help you with the HAMP modification.
Don't believe it, as if you try doing it yourself, you will screw up the
whole process! As always, your local,
experienced, seasoned real estate attorney is the best candidate to help you with this process.
A downside is that the lawyer or the former mortgage broker involved with these modifications will
frequently ask for 1% of the entire mortgage for this service (albeit, they know what they are doing). In my opinion, this is a disservice. Mortgage mods are tricky but this is not brain surgery!
Finally, avoid paying for mortgage modifiers who are not local. These 'pros' are frequently in Florida, Texas or California. You are taking money out of the Northeast and giving it to the New South; something your federal government has been doing for 50 years! Do you want to continue this process voluntarily and shun your local community and economy?
NEXT, CHECK MY POSTS FOR MORTGAGE MODIFICATION RULES AND ANALYSIS
