How Court Approved Mortgage Modification Programs are Different than Refinancing

Transcript

good afternoon everybody it's jeff jenkins and eric clayman here again um for our weekly facebook live presentation do it every thursday at two o'clock generally unless one of us is you know on vacation or something like that meeting with clients speaking to a judge yeah whatever um today we're going to talk about a couple of things but the the first one we wanted to talk about was um loan modifications versus refinancing your loan uh the interest rates have gone they're coming back up again but they were very very low and they're still a lot lower than you might have on your mortgage loan um uh if you read finance eric want to talk about that if sure let's both talk about it hi everybody um and jeff's talking about your mortgage and many people as a result of covid as a result of what's happened to our economy have fallen behind with their mortgages and one way to catch up is to refinance because although people have fallen behind with their mortgages generally in new jersey certainly in the areas of new jersey that we cover from let's say middlesex county down home prices have gone up quite a bit so you may have equity in your home which is good but you're behind with your mortgage payment which is bad so that's an unusual situation where you're building equity and you're behind with your mortgage so how do you cure that one way to cure it is to do a traditional refinance contact a mortgage company your mortgage company or any other mortgage company and try to recast the loan problem with that is that if you are behind with your mortgage it's difficult to get credit that would be difficult to refinance a mortgage company is not going to be um banging down your door to refinance your loan when they see that you're 12 or 14 months behind or even a couple right and if they do the interest rates that you see advertised may not be available to you right exactly so we have a and a refinance is expensive it always is there's points there's sometimes attorneys fees closing costs title insurance it's expensive it costs a lot of times they say we're going to put it in the loan so you won't yeah anybody's expensive you might have to set up another property tax escrow a property insurance escrow and pay you know one or three months worth of property taxes up front and some money toward the property insurance up front um so it is it can become a kind of expensive process so we have an alternative and we're not talking bankruptcy right now but we have an alternative for you which is contacting your mortgage company and asking typically for what they call their loss mitigation department and talk to them about what's called a loan modification now jeff you and i have been in business a long time to helping people behind with their mortgages but i would say in the last two or three years we've done more we've helped more clients with loan modification in the last three years than we did in the previous 20 years yeah it's a recent phenomenon yeah exactly that's right i mean 20 25 years ago if you called up a mortgage company and said look um i like to kind of recast my loan you know my interest rate's kind of high i'd like it lower i like my payments lower they laugh at you you know you wouldn't get anywhere with them but um i guess after 2008 when there were so many defaults we started to see this loan modification thing pop up and it was uh a big thing for a while i think it's been kind of going down the hill although with kovid and all the forbearance agreements that may have been entered into or the the delinquencies that have built up it becomes a real a viable option again and something to think about right and that's a very interesting point you're bringing up jeff at first i think we were leaning towards people who are behind with their mortgage and has have not spoken to their mortgage company about what to do we have many clients and many of our neighbors and friends and colleagues who have already spoken to their mortgage companies and have received forbearance agreements now a forbearance agreement is just that an agreement between the mortgage holder and the consumer or the residential owner of the real estate or any owner of real estate who has a mortgage so it's an agreement between the mortgagee and the mortgagor that the missed mortgage payments will be for not forgiven but it will not be an event of default and then there has to be a negotiation as to what to do with these payments in forbearance about what to do about these missed mortgage payments and jeff the mortgage companies are clear they think they're saying these these missed payments are not being forgiven so so what are being done there's a bunch of things being done yeah yeah that's right um a lot of the governmental insured mortgages are saying are allowing the mortgage companies uh with those types of loans to simply place the forbearance amount for a particular loan on the end of the loan so if we have somebody who's behind 12 months and the coveted business is over with and you go to the mortgage company and say what can we do they might say look we're just going to put it on the end of the loan period um other mortgage companies and and this is it may say we want you to apply to our loss mitigation department and request a loan modification and with a loan modification they're going to take whatever you owe be it back payments escrow money for property taxes or insurance can take everything that you owe put into one piece and have a new loan probably with a reduced interest rate and probably with an extended term the term of the loan is probably going to be longer than what it was formerly and they're they're doing those things reducing the interest rate and extending the term of the loan to try to keep your payments where they are or maybe even a little bit less so that it's affordable to you i mean the thought here is these mortgage companies are not set up to acquire uh 10 million properties and sell them you know and that's just in new jersey right so um they're trying to come up with other ways to get you to start making payments again because that's how they make money you're making payments each month you've got a loan at interest and uh so that's what they're trying to accomplish with a loan modification and unlike refinancing you don't have all these charges it's just the mortgage trump company simply redoing the loan uh making a new mortgage loan but jeff we've also had clients who can do neither that's true they get rejected for well refinance is an applicable because as we talked about if you're behind with your loan your your credit report may be hurt uh maybe down you just can't get a regular refinance and the mortgage company either because you're not familiar with the process or because you just don't qualify under their guidelines which are kind of random so what do you do if you're behind with your mortgage and you want to save your home you have to consider home that's that's like from that hbo movie they make fun of people to talk like that anyway if you want to save your home home you want to um at least consider filing bankruptcy right right before you speak we i do want to make this observation people who are behind with their home mortgage payments are generally have many other bills because you don't fall behind with your mortgage unless you have to so you probably have credit card debts medical bills driving related bills and all sorts of other things so sometimes just a loan modification doesn't do enough for you anyway so that's when talking to a bankruptcy attorney is something to really consider yeah you should and and there was a time when i felt that uh just based on our clients coming in and talking to us it seemed that doing a chapter 13 would actually help them get a loan modification i mean really and truly i'm not just saying that and and um like we had some swimming pool clients if you'll recall who'd been turned down like three times for a loan modification and they came to see us and like two three weeks later they had one because they were and maybe it's because the mortgage company doesn't want to fiddle around with the chapter 13. I don't know they don't want to pay attorneys to get involved and all that kind of there's a seriousness involved when consumers call us and file bankruptcy it's not as if the person is just dealing with a mortgage company now they have lawyers on their side right and that's often why these things settle yeah more favorably and um when these loan modifications first came out we saw them quickly become pretty successful the majority of the time when people applied for them and as time went on we've seen that kind of decline although now with the covid situation and so many people behind in their loans i really think that the loan modifications are going to be um accepted in many many cases by a mortgage company but they don't have to do that they don't so um is there something else that they could do eric if they can't get a loan modification can't be financed they can file bankruptcy right if if that's the case if seriously you're not filing bankruptcy and you can't refinance and you can't do a loan modification if you've been blessed with appreciation on your home then i guess selling your home is something you can consider sure i mean that's and and buying a smaller home or renting for two years get your credit back in gear jeff you know maybe we should take a short break just from our agenda to talk about that how filing bankruptcy is not good for your credit score but we have a way around that don't we absolutely we do business with a company who will repair your credit score um after if you do a chapter seven after you get a discharge about four months after you file bankruptcy one way or the other after a chapter 13 when your confirmation when you get up your confirmation is confirmed you know claim is confirmed that's confirmed um then we can give your name to these folks that we work with and they will work with you to increase your credit score and they're very very good they probably handle close to 100 000 people that company has i mean that's what they do and jeff we pay for that right yeah i make payments every month to them thanks remind me that's another bill um but we're doing it so that our clients can get their credit score back up and so when you're you get to the point where we can do that with you either at the end of the chapter seven or after your plan is confirmed in a chapter 13 it's not going to cost you a dime that's our deal with this company we pay them monthly and we're paying them so that you can deal with them for free and get your credit repaired and generally they're very good about being able to do that jeff i haven't had i've referred dozens of people to them and i have not had anyone ever call me back and say why did you do that hey that didn't work yeah i mean i can't say every single client calls back and says thanks but you're permitted if you want to call that and say thanks you can but no complaints about them at all just now the guy who runs the company phil tyrone is his name is um very very good and he's going he's trying to he calls it seven steps to 720. he's trying to get your seven your credit score up to 720 um and his program lasts for like 10 to 12 months he'll have you send you emails each month and have you have you do certain things each month to fix your credit report and he's very very specific about what he wants you to do and generally this process is very successful so don't think that if you go to a bankruptcy your your credit's ruined forever and ever that's why when jeff asked me that last question well what do you do if you can't get a refinance you can't get a loan modification you're behind with your mortgage you don't want to file bankruptcy your credit score is something that moves and we can help you make it move up don't resist filing bankruptcy just because of a credit score concern because if you're behind with a mortgage don't file bankruptcy and don't use this program we're talking to you about your credit score will most likely not assuredly but most likely be lower than your neighbor who also has fallen behind his mortgage but chooses to file bankruptcy and then runs through this program so you're really hurting yourself in any number of levels remember the bankruptcy case helps you in two ways number one the moment you file bankruptcy you're protected by what's called the automatic stay which stays or stops all collection actions no phone calls letters threats wage garnishments tax sales repossessions foreclosures are all stopped and number two you obtain what's called a discharge of your debts and that means you won't owe the people any more money forever the creditors any more money even though you won't be paying them back necessarily anything or if you do it'll probably be just a small amount right and you if you're listening to us you remember that we are bankruptcy attorneys and we do have a bankruptcy firm so we generally talk about bankruptcy when we talk about things actually if you're behind with your mortgage maybe you've had a forbearance with a mortgage company and they're not going to do anything for you to fix this amount that you owe if you owe other things or even if you don't you might want to talk to a bankruptcy attorney it's not a bad idea the the cares act and the legislation that's come after that has allowed us to extend the chapter 13 plan to 84 months formerly it was 60 months was the maximum time so now we've got seven years instead of five and while paying mortgage reviewers back over five years might be onerous for you it might be difficult because of the amount of the payment you have to make each month adding two more years to the plan is going to lessen the payment and might make it affordable right there's many many people who come in to see us and they don't know how they can save their house but they know they want to save their house and what jeff is explaining is that we have more tools in our toolbox now than we used to right and that's great exactly jeff what about should we talk a little bit about people who don't own their homes but um evictions or did you want to talk about people who are behind with utilities let's talk about utilities first because that's a group of people that have been calling us a lot so that's a good idea yeah um you know that there's been a moratorium on utility shutoffs and that started as something was voluntary by the utility companies and it may still be that way but i don't know if the governor got inv involved in one of his orders said he can't shut utilities off certainly he did i think for the cable and telecom industry um but any moratorium on utility shutoffs for water sewer cable or whatever is supposed to be electric it's supposed to end on june 30th and today is june 10th so 20 days from now that's going to come to an end and the utility companies are supposed to set up a payment plan for you which may be affordable according to what they work up and it may not and you may have other things other debts that uh you're behind on that that need consideration if we do a bankruptcy eric what's going to happen with the utilities and again um i think the way you set this up was right jeff most people don't come in here uh because they have one jersey city power and light bill for eleven hundred dollars that's not enough reason to file bankruptcy but most people who file bankruptcy are also behind with your their utilities the key to a successful bankruptcy is to include all the bills let jeff and i tell you not to include a bill bring it all in clean it up so with utilities we include the utility bill in the bankruptcy we have contacts with every utility company collection department in new jersey we call them we either fax or scan over an email to them proof that you're in bankruptcy and the bill becomes zero now they were permitted before before corona before the buyer before covered they were allowed to ask for security deposits i guess after june 30th they're going to be able to ask for security deposits unclear i would think so but during covid if they were going to start your utilities again they there wasn't there there was not a security deposit requirement in fact they weren't supposed to charge security deposits so let's assume it's typically a security deposit is very affordable and something um that we help negotiate if necessary the basically it becomes a new account your old account if you owe south jersey gas 1750 your next bill will show zero your name might have a different lettering or something like that there's something different and it's a completely different account number jeff it's a great fresh start you file bankruptcy you don't owe the utility company any more money and they have to keep the service on such a relief for people who come to see us oh yeah who have so much going on and to worry about having oh it's been what 90 degrees every day this week not having electricity in 20 days not having heat in the winter not having water it's such a relief to file bankruptcy it certainly is and and like we mentioned all the time it's it's not just one thing that we can get rid of and generally when people come in to see us to talk about filing bankruptcy there's more than one thing that's delinquent and so the bankruptcy can do wonders for all the other debts generally you know most the time if you come in to see us almost all the time i should say we're going to be able to take care of all your financial problems by filing a bankruptcy one type or another yeah both of that both you and i have used the same shorthand today and i just want to be clear on it when we say when you come in and see us of course it's 2021. so we will gladly see you in the office in fact this very office that you're looking at right now is my office but we also can see you from the safety and comfort of your home we're set up completely online with a um docusign type system called pandadoc and with um all sorts of phone and computer communication state of the art and it's all um it's all secure so if you are not comfortable coming into our office or quite frankly you're working full-time and don't want to come to our office and that's something we used to not deal with really but now we've been now with our uh enhanced technology we can see you from the uh safety and comfort of your home any day of the week just give us a call that number below we can and that and that could go just for a consultation you might call up and I'm happy to talk to you in the phone um and you're at home and we're here we can put your picture on the screen or not that's up to you can talk to owner of paralegals or you can come in here and talk to us right the first call might be a call and then you might want to just come in and see us right and uh we're all set up for you and um it really does work we've gone over today some of our real like meat and potato type people who need to file bankruptcy behind with their mortgage giving you some options you can do or try a loan modification you can try to refinance you can try to sell your house or you can file bankruptcy and then we're getting many calls from people as this moratorium is over with utility shutoffs what are they going to do again the moratorium on utility shutoffs was not forgiveness of the utility bill right so they still owe money and nor were any of the moratoriums whether it's rent mortgage payments utilities it's it's still the debt's still there and that's what we're here for make sure that that goes away that's when you get a fresh start and you feel so much better and as we talked about in the middle of today's episode and if you're concerned about your credit score we'll help you with that time yup at no charge just as a that's our gift to you to get you back on the right track so i think we're okay for today eric we'll we'll talk about evictions next week and maybe some other things so until next week thursday at two o'clock goodbye and god bless