Loan Modifications for Phoenix AZ real estate
October 27, 2008
Phoenix real estate sales are sluggish. As a result of re-adjusting mortgages, falling Phoenix real estate prices and higher unemployment the number of foreclosures and short sales are rising.
Due to the time it takes a short sale package approved with seller’s lender, most of these homes end up going into foreclosure and then become bank owned real estate (REO’s). 
Believe it or not, banks do not want your home to go into foreclosure. It is very costly and they lose a client who was paying interest (and late fees).
Unfortunately, banks and lenders are overwhelmed with clients who are in desperate need of help to save their home from foreclosure that they simply do not have resources to help everyone.
Many borrowers that could have been saved are simply slipping through the cracks. There is something a borrower can do stop the bank from foreclosing and at the same time keep them in their home.
It is called a Loan Modification A procedure whereby a loans payment plan is altered due to the hardship of the borrower. This can include the rate, term and monthly payment amounts.
Current Balance: $200,000
Arrears: $20,000
Attorney’s Fees and Foreclosure Costs: $7,000 Total: $227,000
In this down market, let’s assume your home is worth $210,000
If the bank forecloses on you and your home goes to Sheriff’s sale, it will most likely
only sell for 65% of it’s true value, or $136,500
So, the lender has received $136,500 for your home that you owe $227,000 on.
$227,000 -$136,500 = $90,500 Loss
—OR—
They renegotiate your contract for you and save themselves a lot of money.
-Let’s assume they ask that you send them $2,000 in good faith
-They forgive part of the entire s ($27,000) by let’s say $10,000
-They roll the other $15,000 onto the back of your loan, increasing its balance
-They lower, and FIX, your interest rate to a reasonable level
-They stop the Foreclosure process
Let’s assume your new payment will be $1,400 at a fixed interest rate.
In just the first 2 years, they’ll receive 24 pay payments of $1,400, or $33,600.
So, yes they will receive less than what your current contract states, but as you can see:
After forgiving $10,000 in arrearages, they saved $90,500 by letting your home go to Sheriff’s sale and gained an additional $33,600 in payments just in the first 2 years.
That’s a total of $124,100!!!
The same holds true if they renegotiate your contract just to keep you with their company.
Example over a 5 year period:
If they drop your $1,200 payment to $1,000, yes they will lose 60 payments at $200, which is $12,000 but they will continue gaining the $1,000 each month for 60 months, which totals $60,000.
Either way, they come out tens of thousands of dollars ahead!
Most importantly, you get to stay in your home and at a monthly payment that is now manageable.
There are two types of loan modifications; Civilian and attorney. We will talk about these tomorrow. However, there are some important differences to both which we will discuss later.
The important thing to know is that you have options prior to facing foreclosure. Foremost, contact your lender as soon as you know that you may have some trouble making ongoing loan payments. The more time you have before foreclosure, the better.
Don’t avoid what may inevitable. Don’t be ashamed. You are not alone.
Contact your bank and/or your real estate professional to help you through a difficult , but manageable process.
Make sure you work with a Phoenix Realtor or Scottsdale Real Estate agent who is experienced with short sales and bank owned transactions.
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Copyright © James Wexler *Loan Modifications for Phoenix AZ real estate*
If you are listing your home as a short sale in Phoenix Arizona or Scottsdale Arizona make sure you hire an agent who knows how to do short sales and has the experience to get the job done.
Call 480.221.8080 to find out more about Phoenix AZ Short Sales and Scottsdale AZ short Sales
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2 Responses to “Loan Modifications for Phoenix AZ real estate”
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Hey, I really liked that you posted this information. I used to work in the credit field for a short while and I think that Attorney based loan modification is the best deal. Love to hear your thoughts…
Dave just texted me about this article and I think what your doing is right on. I also agree with Dave that Attorney Based Modification is the best option.
If anyone is interested in Loan Modification outside of AZ I can help just contact me and I can help. We are doing the homework.
But if you are in AZ follow this up and of course do the due diligence, the homework.