My finance tips

Archive for July, 2010

Loan Modification – What Is A Loan Modification?

A Loan Modification is a modification to the terms of an existing loan made by a lender in response to a borrower’s longterm inability to repay the loan. Loan modifications typically involve a reduction in the principal balance interest rate or an extension of the terms. In some cases a different type of loan or any combination of the three. A lender might not be open to providing a loan modification to a borrower unless they are behind on their mortgage payments at least 4 months. By this time their credit is ruined and the lender or mortgage servicer can profit further by negotiating a forbearance agreement and collecting more fees.

A Loan Modification should be done by a Law Office and will stop foreclosure.

A Law office can use advanced legal techniques to achieve the most aggressive results for the client. An Attorney understands State and Federal laws as well as lending regulations. In some cases of RESPA or TILA violations an Attorney can threaten a recession of the loan or litigation causing the lender to return ALL fees and interest paid through the loan. A Loan Modification company simply submits a package similar to a loan submission to have the lender review and decision. This DOES NOT achieve the best result for the borrower. In matter of fact it could make matters worse due to the fact one has exposed themselves to the lender without properly evaluating the entire situation. If the lender or broker has misrepresented the terms or worse yet committed bank fraud a Law Office can and should use the necessary means to bring the lender or broker to their knees to modify the loan and forgive some of the principal. In most cases a Real Estate Law Office can stop foreclosure with out bankruptcy simply by calling the lender or mortgage loan servicing company and getting a 30 day extension for a loan modification.

Why should you use a Real Estate Attorney and not an Attorney based or Attorney backed Loan Modification Company?

A Law Office that specializes in real estate law can negotiate a loan modification agreement to stop foreclosure and get their client affordable mortgage payments. A loan modification with an attorney is different from forbearance and in most cases a forbearance agreement will require a borrower to bring in 100 of the arrearages. This is usually impossible for home owners already struggling with finances. A forbearance agreement provides shortterm relief for borrowers who have temporary financial problems while a loan modification agreement is a longterm solution for borrowers that normally will reduce the interest rate change the terms of the mortgage and may reduce principal balance a combination of all three.

Example of a loan modification for an “option ARM” successfully completed from the Feldman Law Center in California.

We have completed the modification on this borrower the following are the terms of the loan modification:

New UPB 842442.17

Term 40/30

Pamp;I 3192.29

Escrow 771.05

PITI 3963.34

Due date 11/01/2008 1st modified payment due in 2 months

Maturity date 04/01/2036

Interest Rate 3.149 for the 1st two years 4.149 for the 3rd year and 5.149 on the 4th year and for the remainder term of the loan

Contribution 310.00

This client had a 7.50 interest rate and the loan recast to a 6700.00 monthly payment. As you can see this is a drastic interest rate reduction with no negative amortization.

You may contact the FELDMAN LAW CENTER and request to see the clients’ actual document or listen to the recorded testimonial!

Loan modification is a term very unfamiliar to homeowners but not for very long. What most people are coming to realize is that losing their home to foreclosure is becoming a real possibility. Home foreclosure in America today is at an all time high and is affecting many homeowners that never believed they could lose their home to foreclosure. Homeowners are feeling the crunch of higher interest rates fuel costs and a slowing economy. A loan modification may be the only way for a homeowner to save their home. Negotiating with the bank for a modification of your home loan can be an overwhelming process for many homeowners. Major lenders such as Countrywide bank Indy Mac bank Wells Fargo Bank of America WAMU New Century Quicken Loans Aurora Aegis EMC Mortgage CITI Mortgage Chase Bank are overwhelmed with defaults and foreclosures. That is why retaining the services of an experienced law firm or real estate attorney rather than a loan modification company is of extreme importance. I have been around the mortgage industry for years and now find myself in the mix of the mortgage mess with an Option ARM loan that is due to explode in September.

The Mortgage Meltdown has hurt our entire economy as many families are facing foreclosure due to toxic mortgages and declining property values. California Florida Nevada Arizona homeowners are the main sufferers as well as many of the Midwestern and east coast states. New mortgage laws to protect home owners are now in affect. If you want to find mortgage law information got to www.feldmanlawcenter.com or for foreclosure laws in your state you can simply Google your city and state foreclosure laws or find them on the Feldman Law Center web site. There is a wealth of information about loan modifications and other real estate services. In some cases the home owner may chose not o keep their home. In these instances an attorney can offer a deed in lieu of foreclosure and get a settlement offer from the lender. The truth is these people can hire an Attorney to represent them with their lender and save their home and their hard earned credit. Lenders are facing record losses and may not be willing to help home owners unless they are forced to listen. A letter of representation from a licensed real estate attorney seems to get their attention fast. You can find Mr. Steven Feldman at http://feldmanlawcenter.com/home.html

About the writer:  Andy Hygate writes for Bad Credit Loans a leading UK provider of finance products for people with bad credit

An Uncertain Economy Your Retirement Money

Many of you are in the red zone right before retirement or you’ve already retired. No doubt your number one fear is running out of money in retirement. You’re part of a very large and growing demographic force: 35 million over age 65 50 million drawing Social Security and 78 million baby boomers now turning 62. This means the future demand for everything used by the “retirement set” will increase and “retirement prices” will rise dramatically. Many of you may have accumulated a retirement nest egg in a pension account will draw a company pension and/or have other savings and investments earmarked for retirement. Where should you keep your retirement money?

If you’re keeping up with economic and financial developments here’s what you’re seeing: subprime credit meltdown that has destroyed housing and is now spilling over into automobile debt and credit cards; highly volatile stock and bond markets; a weak dollar fueling higher prices for oil and other goods; more unemployment and rising inflation; retail sales consumer confidence and new jobs creation in sharp decline; drastic interest rate cuts by the Federal Reserve to avoid a recession; a money giveaway stimulus package from Washington to prop up the lagging economy; widespread talk of recession and stagflation. These all add up to troubled economic times which should prompt you to review where you have your retirement money.

You’re told the stock market is the best long term but “long term” has a different meaning in retirement. Didn’t the dot.com stock market meltdown in 20002002 send many retirees back to work and prevent others from retiring? Aren’t the current inflationadjusted stock market indexes below their previous peaks? Regardless the loud voices of Wall Street and investment companies are advising you to buy now at bargain prices. Are the markets headed higher or is their advice selfserving? Who can forecast the economy or the stock market?

If the stock market craters as it did in 200002 and 197374 and you lose some of your retirement money how will you replace it? Since there will be no second chance I encourage you to think carefully before you commit your money. If you’ve been told that you’ll do just fine over the longer run generally meaning ten years make sure you can wait this long for a market rebound. Also remember that a rebound is not certain!

What about fixed rate places like government bonds bank CDs and money market accounts? These are rocksolid safe unless your greatest fear is outliving your money. Since current fixed rates are lower than inflation you’ll be losing purchasing power with these choices. The potential loss of purchasing power will only add to the risk of outliving your money. What about real estate collectibles and nonmarket investments? These are not only risky but generally illiquid. Before committing your retirement money ask yourself this question: “How will I handle the worse case outcome?”

There is one savings place that offers an “opportunity” to make an abovemarket rate of return without the risk of loss if held to term. It is guaranteed by some of the world’s oldest strongest and largest financial companies. The rate of return is determined by stock/bond market indexes with owners sharing in the upside potential but avoiding downside losses. The worse case outcome is a guaranteed positive rate of return. The earned interest is income tax deferred until actually withdrawn and there is no mandatory age when the money must be used. Additionally it can be turned into a guaranteed lifetime income that can be started stopped and stored. What’s more it offers penaltyfree partial liquidity for emergencies and bypasses probate if the owner names a beneficiary. It can be opened for a small or a large amount and sometimes more money can be added later. There is no law which limits the amount of money that can be placed in it. It is truly a safe place to keep retirement money.

It is maligned by Wall Street and bankers because it competes with their products. The financial press doesn’t like it either primarily because they are uninformed misinformed or just plain biased. I’m talking about fixed indexlinked annuities that are offered by insurance companies: the same companies that insure your home live health business and other valuable assets. The worse case outcome is a positive albeit small rate of return if held to maturity but there is an opportunity to do much better. Fixed indexlinked annuities are not for everyone but you need to consider them as one of your safe options for retirement money. Where are you keeping your retirement money in today’s uncertain and troubled economic climate? If in risky places now is a great time to review your options.

Shelby J. Smith Ph.D.
March 2008

Learn about safe money places check out the Retirement Pros website http://www.theretirementpros.com/ I’m also doing free monthly video seminars online sign up at: http://www.theretirementpros.com/TeleSeminarMRM.php

About the writer:  Dr. Smith has an earned Doctorate in Economics from Iowa State University of Science and Technology along with a Bachelors and Masters degree in Economics from the University of Wyoming. He started his professional career as a college professor and held professorships at several Midwestern and Southern universities. He entered the corporate arena as the Chief Economist of a Regional Federal Home Loan Bank moved then into the banking business where he served as Economists Chief Financial Officer President CEO and Chairman of several institutions. He started a financial marketing company that catered to financial institutions and their clients by providing investment products. For the past twenty years Dr. Smith has been providing consultation and services to conservative investors and savers positioning their assets for retirement. In the process Dr. Smith has managed a broker dealer and held licenses that allowed him to offer securities and insurance products to the general public. He is currently the ask the expert at the Retirement Pros a senior officer at BHC Marketing Ltd. and writes newsletters and other retirement articles for the retirementminded.

Simple Ways To Keep More Of Your Money

Here is a powerful yet simple technique that allows you to have more money for your business starting today!

There was a time in my life when I went from a tiny income to a sixfigure income in a short period of time. From my experience I found that if you don’t control your spending you don’t see a huge difference in your financial stability even if there’s a huge increase in your income.

Obviously with a larger income you have more opportunities. You can buy more and do more as well as live a better lifestyle. You may feel financially stable but if you don’t control your spending then your financial stability does not really improve. It’s not how much you make it’s how you control your spending that makes a real difference in your financial stability. If you make 10000 every month and you spend 12000 monthly at the end of the year you’ll be 24000 in debt even though you earned over 120000!

Tom had a goal. Within two years he wanted a monthly income of over 4000. He accomplished his goal within that timeframe. The only thing missing was financial stability. Even though Tom increased his income he also increased his spending by almost the same amount. He reached his income goal but the real goal was not 4000 a month it was financial stability and he didn’t accomplish that because as his income grew so did his spending.

I’m sure you’ve heard stories from Hollywood in which famous people with enormous incomes have gone bankrupt. Most of the time the problem is excessive spending. Celebrities usually make and spend enormous amounts of money.

You don’t need to change your business drastically to become financially stable. You don’t need to become cheap you don’t need to suffer and you don’t need to change your lifestyle drastically. You DO need to become aware of your spending habits and control your spending carefully.

I know what you’re thinking. “How can I save when there’s nothing left? All my income is accounted for.”

You’re right. All of your income is accounted for but you have spending habits you’re not aware of. The only way to become aware of them is to get clear about the way you spend money. To keep more of your money simply spend less of your money!

Here’s an example. On your way into the office you stop by and grab a coffee and bagel and the morning paper. It’s no big deal right? Lunch comes around and you’re out another 5. On the way home you have a soft drink for another 1. It’s only a few bucks right? Well let’s take the total 8 and multiply that by 240 working days. That’s 1920 a year.

It’s not my intent to tell you how to spend your money; my point is that you must be aware of how you spend it. In the above example put away 1920 a year in a good retirement plan and with enough years you’ll end up with a worthy retirement fund.

The only way to understand your spending habits and see patterns emerge is to record your purchases. Every single one. If you don’t you won’t be able to see the areas that will allow you to cut out excessive or unnecessary spending. You don’t have to do this forever but do it for at least one month. To benefit from this article and have more money without increasing your income or profits you must record your daily spending.

Once you identify the areas where you’re spending too much money you’ll be able to cut down in those areas. Controlling your spending starts with your thoughts. If you can control your thoughts you can easily control your spending.

Here are a few tips for controlled spending

* Avoid windowshopping browsing the web or anything that gives you opportunities to make purchases that you don’t need. My friend Bruce once told me “Stay out of the stores!” He said “Here’s what I do if I need something. I go into the store grab it and get out!” Every time I’m in a store his voice echoes through my head: “Get out of the store!”

* There’s a difference between a want and need. You require needs but you can live without a want. Get your needs and control your wants.
* To control your spending simply ask yourself a few simple questions like: Do I really need this? Can my business survive without this? What am I giving up if I buy this? Where can I put this money to better use?
* If you’re working long hours and your sales and profits are just enough to make ends meet then you’re spending too much money.
* If you re just making payroll and if you have bills that are piling up then you’re spending too much money.

If you don’t have any money saved and you have a lot of debt then you’re spending too much money. So basically you’re in a prison controlled by your finances. Every time you make a purchase you’re trading some freedom for the purchase. Become aware of this fact. Invest in your freedom not in items you buy.

Action Steps To Help You Increase Your Income

1. Identify your spending habits. For at least one month list each purchase you make every day.
2. Reduce or cut out those areas where you have excessive or unnecessary spending.
3. Use questions when you make purchases such as: Do I really need this? Can my business survive without this?

Important Points to Keep In Mind When Increasing Your Income

* If you don’t control your spending you don’t see a huge difference in your financial stabilityeven if there’s a huge increase in income.
* You may feel financially stable but if you don’t control your spending then the financial stability does not really improve.
* It’s not how much you make it’s how you control your spending that makes a real difference in your financial stability.
* You do need to become aware of your spending habits and control your spending carefully.
* If you don’t have any money saved and you have a lot of debt then you’re spending too much money.
* Every time you make a purchase you’re trading some freedom for that purchase.

About the writer:  Acey Gaspard brings his 20 years of business experience to A Touch of Business with over 1100 ORIGINAL pages of tips reviews and tools to help you market and run your small business.