retmar Posted December 14, 2009 Report Share Posted December 14, 2009 I've been told by several that lenders are required by law to modify a loan if the loan payment is more than 31% of income for any who are having problems.ALSO, it is said they MUST eliminate a second IF the amount owed on first is more than value of home. The term used is "Lien Stripping".My question is if this is true. Regarding the Lien Stripping, if not true, then what would one do to look into this as I did see a mailer from a broker noting this, but, not saying if it is or is not a requirement, only that it can be done and they would help.What does anyone know, or where can I find more info?Thanks all! Link to comment Share on other sites More sharing options...
trueq Posted December 14, 2009 Report Share Posted December 14, 2009 http://www.familyandconsumerlaw.com/2009/12/it-has-nothing-to-do-with-number-of.htmlhttp://www.familyandconsumerlaw.com/2009/12/is-your-house-worth-less-than-you-owe.html Link to comment Share on other sites More sharing options...
Methuss Posted December 21, 2009 Report Share Posted December 21, 2009 Lien stripping is a chapter 13 bankruptcy process: Where a secured property is worth less than the 1st lien, the second and subsequent liens are considered wholly unsecured and the debt is "Converted" to an unsecured claim. These unsecured leinholders judicially are stripped of their interest in the secured property with no more rights over your assets than, say, a credit card lender.You cannot strip a lien in ch7 bankruptcy. Only ch13. Link to comment Share on other sites More sharing options...
retmar Posted December 27, 2009 Author Report Share Posted December 27, 2009 trueq, thanks for the references!Methuss, thanks for the info. I'll pass it on. Link to comment Share on other sites More sharing options...
2ndTimeAround Posted December 28, 2009 Report Share Posted December 28, 2009 I've been told by several that lenders are required by law to modify a loan if the loan payment is more than 31% of income for any who are having problems.ALSO, it is said they MUST eliminate a second IF the amount owed on first is more than value of home. The term used is "Lien Stripping".My question is if this is true. Regarding the Lien Stripping, if not true, then what would one do to look into this as I did see a mailer from a broker noting this, but, not saying if it is or is not a requirement, only that it can be done and they would help.What does anyone know, or where can I find more info?Thanks all!There is no law requiring a lender to modify a loan. There were several lenders that received government bailout money. All that is required from the government is having a loan modification program in place. They are not required to award any modifications.I have witnessed one mortgage company's going as far as setting up a web site, indicating they have a loan modification program in place. The telephone numbers listed on the web site are numbers to an answering service in India. Every call you make, you speak to a different person than the one before, all the person does is take your information and say they will get back to you.One lender Ocwen for example - they have a message you listen too while on hold. They say how many modifications they are doing, and saying how easy it is to apply for a mod. So your on hold for about an hour, listening the the same message, and then the phone hangs up.However most lenders (BoA for example), applicants can apply for a modification, proving they are in a hardship, since they received money from the government, they are required to review individuals situations. Again they are not required to award a loan modification. BoA is the busies lender now since taking over Countrywide, some mods are taking up to 9 months to complete.The payment of 31% more then your income, came into play when O'Bama went on national TV last March introducing his plan. Everyone that heard his message thought anyone could apply. The O'Bama Plan looking at the numbers reorted by News day, only one person in 851 people qualifies for it. For the home owners that does qualify - what they are not saying, the lender gets a $3500 rebate each year for 5 years from the government. So they are looking like gold helping the homeowner, in fact they are still getting still getting their money.As far as a second mortgage - I have seen loans modified, 2nd mortgages the principle can be reduced, making the payment really smaller. The 2nd lender is they are in 3rd lien holder position, it would be impossible to foreclose on the property, if they did they would have to pay off the 1st lender (who is in 2nd position, the government is always in 1st position). As for the flier indicating "Lend Stripping" (read the fine print), call them and mention the State Attorney Generals office wants their address, I bet they avoid you, if not hanging up on you.At the beginning of last year a business partner and I successfully mailed out fliers to 2500 homes owners that where in 2/28 sub prime loans, soon to start adjusting. We were looking to advertise our Mortgage Attorney modification service. At the time there were a few lenders discussing "Short Pays" with home owners. We had our attorney look at it - we wanted to list that on our flier.A Short Pay is when there are two appraisals - one high and one low. We as Mortgage Attorneys negotiate the difference, and the principle can be reduced. The fact is - the lender has to be willing to do it, there is no law in place requiring lenders to reduce any principle. Advertising to distressed home owners, is a felony to promote fraud via the mail.Most home owners that attempt to do a modification on their own, that get turned down. Probably didn't fill out the application correctly (listing too much information can hurt you). Link to comment Share on other sites More sharing options...
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