New wave in Mortgage Crisis will hit in 2010

The Consumer Mortgage Audit Center is reporting according to a poll they conducted of Florida Attorneys that a new wave of in the Mortgage Crisis will happen in 2010. The new will be due to the recasting of subprime option Arm Adjustable Rate Mortgages that are scheduled to recast in 2010.

The Consumer Mortgage Audit Center spoke with Florida Attorneys that are on the battle grounds of the United States foreclosure crisis and according to the poll fifty three percent expect that the recasting of subprime option Arm Adjustable Rate Mortgages will cast another wave to the Mortgage Crisis that is larger than the crisis the country incurred two years ago. The poll also shows that sixty one percent of those polled expect to work more on mortgage loan modifications in 2010 opposed to 2009. Sylvia Alayon, Vice President of Operations at The Consumer Mortgage Audit Center believes that there are going to be wake up calls for homeowners who have not modified or refinanced their current mortgage and hold an Adjustable Rage Arm Mortgage. She warns that homeowners holding these types of mortgages need to take steps now to analyze their particular situation and get help before the bank sends a foreclosure notice.

The Option Arm Adjustable Rate mortgage product allowed borrowers to make payments on a monthly basis that consisted of an interest and principal option, the interest only option or part of the interest option. The issue with the various options on the Option Arm Adjustable Rate mortgage product is that when the loan recasts many of the homeowners will be subject to repaying the negative amortization balance that has accumulated due to paying less on the mortgage then the actual principal and interest due on the loan. The loans that are about to recast will have a higher amount of interest due than what the actual loan amount is; this is called negative amortization and occurs when the borrower is paying less than the amount owed on the principal interest.

The amount of foreclosures has the potential triple based on the next recasting projections. The principal balances will increase and the property values on these homes are still in the plummet stage; limiting the option of refinancing for homeowners who will be subject to recasting and in a negative amortization loan. The Consumer Mortgage Audit Center stated that few of the Option Arm Adjustable Rate Mortgage loans have been refinanced or modified and when these recast thousands are homeowners will seek to modify as they fall into negative amortization. The Consumer Mortgage Audit Center believes these homeowners should act now to modify or refinance before negative amortization occurs.

The Consumer Mortgage Audit Center recommends the following to homeowners who have Option Arm Adjustable Rate Mortgages.

Act now; don’t wait for your lender to give you notice that your Arm Adjustable Rate is going to recast. Foreclosure processes are swift depending on your state and do not have to involve you directly. Don’t wait for the lender to send a letter about foreclosure as by that time the process has already begun. If you are a homeowner who is having difficulties making your monthly payment it’s time to get your document together and get organized.

Determine your payment figures. Sit down and calculate what you can afford as far as house payment each month. Compiling these figures will help you when you discuss your options in regard to modification of your loan. Every homeowner’s situation is different and the solutions for each can vary.

Gather your paperwork. Modifications can take over a year to process. The process will run smoother if you have your documents organized. The documents that most lenders are requiring to modify a mortgage are as follows:

Income verification: thirty days of paystubs or most recent tax return if you are self employed.

Credit Report: Know what is on your credit report you can obtain one from the three major credit bureaus. Everyone is entitled to a free credit report each year. You can go online and obtain one. Lenders will pull their own credit report on you and use it to calculate your debt.

Hardship Letter: The format and requirements for hardship letters vary so you will need to contact your lender to determine what they require in the letter and what is required to be written in the letter.

Professional Help: You should consider contacting a foreclosure attorney, or consumer advocacy group as these can be helpful in assisting you when discussing options with your lender. It can take years to keep your home from foreclosure and having a team of professionals that know the workings of the mortgage industry can be extremely helpful. Foreclosure attorney usually don’t charge you for their initial consultation and if you when your case the lender will be responsible for the court and attorney’s fees. Consumer advocacy groups may charge you a membership fee to obtain advice from professionals within their organization.

The Consumer Mortgage Audit Center has been seeing more lenders modify mortgages into lower payment options and Fannie Mae has a program that allows homeowners that are facing foreclosure to switch from ownership to rental. The options are out there for homeowner to take advantage of if the homeowner is willing to work with the lender.

The new wave of foreclosures is coming for those homeowners that will have Option Arm Adjustable Rate loans and we want to get the word out to homeowner to do something now before the loans recast.

The Consumer Mortgage Audit Center’s poll was a conducted as a survey of Florida Bar Association Attorneys. The poll took place between November 3rd and November 6th of 2009. One hundred and fifty attorneys shared their opinions on the survey and of those attorneys that responded to the poll thirty-four percent specialized in real estate, twenty percent specialized in general practice, twenty percent specialized in civil law and nineteen percent specialized in foreclosure defense.

The Consumer Mortgage Audit Center specializes in mortgage forensic research and analysis and is a consulting and due diligence company. The company is made up of a team of mortgage experts and members of the American College of Forensic Examiners Institute. The combined experience of the members in the company represents over eighty years of experience in the mortgage, finance and law fields.

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