Even more depressing is that these “counselors” skirt the intent of the law and avoid fines by posing as the “marketing arm” of a reputable company.

In this case, the principal characters have set up shop with new numbers to convince distressed homeowners into paying for legal services that canbe had at a cheaper rate if the homeowner were to negotiate directly with a reputable law firm.

Ask yourself this question before entering into an agreement with a legal office’s marketing firm:

If the law office can do what they claim and there are the number of distressed homeowners already looking for help, why would they need to hire a “marketing firm?” And

Why would an otherwise respected legal firm can do what the marketing firm claims, why would they allow the amrketing firm to be run by a company whose principal employee has laready had a legal judgement placed against him?

If, like me, the answer raises red flags, you should probably go back to your state’s department of business servcies and make sure the company you are doing business with does not have any red flags listed at their state.

Here’s an exceprt from the article:

At least twice last year, David Lies, the principal of Home Rescue Financial Services in Ashland, which was recently fined by the state for violating several laws regarding loan modifications, was a featured expert on The Real Estate Guys syndicated radio talk show.

On March 28, the program was titled “Principal Reduction — The Holy Grail of Loan Modification.”

“… So you can imagine we were VERY interested when our good friend David Lies said that he had found a principal reduction program that really works — even for investors!” blogged co-host Russell Gray.

“David gets out his treasure map and guides us to the location of one of the most elusive treasures in mortgage mitigation: how to turn negative equity into positive equity with no fees! What?!? REALLY? Wow! By now, we couldn’t help ourselves. We wanted — correction — we NEEDED to know ALL the details, which David was kind of enough to provide. And while not everyone will qualify, for those who do this new program could just be the Holy Grail of Loan Modification.”

While radio hosts gushed, listeners about to lose houses were hoping against hope.

via Ashland mortgage rescue firm faces fine < Passport2 Ashland, Oregon.

Hopefully, you are in the middle of a Loan Modification now or just getting started and have an idea n how to battle your lender. If these instructions are too daunting or you feel overwhelmed with this outline, you should contact our mortgage modification experts. Not only can they help you in preparing your plan, they can also manage your case for you — at no cost.

Equity — the ratio of home value to existing loan amount. Being able to show that your home is less than the amount of the loan — through the use of online resources, helps you show the lender that it is their best interest to modify your existing mortgage. hardship letter — most people looking for a mortgage modification have had a significant reduction in income. Being able to document the change in income, either through a job loss, change of employment or because of unforeseen economic situation like medical bills, overwhelming credit card debt or some other situation helps the lender find a program that can modify your mortgage. Debt to Income Ratio — most federal mortgage modification programs require a 31% mortgage debt to income ratio. By showing the lender your current monthly income and using the 31% number, allows the lender to come up with a mortgage modification that meets the federal guidelines and does not overburden the borrower. A personal balance sheet — a list of all of your income and all of your expenses. Most households should have at least 15 lines of expenses. Do not pad your income — you want to use your real income — if it has dropped significantly and you still have enough to cover your expenses, the loan modification should come out with a more favorable number for you. You should also have a small amount of disposable income left over after you have created your balance sheet and shown the modified mortgage payment. Track every call you make — what time and date, who you talked to, their extension — all of this helps you better figure out the lender’s system — and that is probably the hardest part of this process. Finally — don’t give up. This is a negotiation. If the lender comes with a poor (for you) modification, be prepared to negotiate. If the modification is declined, ask why and what you need to show to get it approved.

Again, this is not easy and many will feel overwhelmed. Having a professional assist you with your mortgage relief project, can well be worth the consideration they ask.

via Creating Your Own Mortgage Relief Project: GoArticles.com.

The new financial regulations will have that affect on lenders beginning in 2011 — the following article outlines some of Bank of America’s tactics in regards to principal reductions.

Among several enhancements to the NHRP announced in late March, the bank unveiled this innovative approach to employing a principal reduction as the first step toward reaching HAMP’s affordable payment target of 31 percent of household income when modifying certain NHRP-eligible mortgages — ahead of lowering the interest rate and extending the term. The reduced principal balance will be a non-interest bearing forbearance amount, and the homeowner may earn forgiveness of the forborne amount by remaining in good standing on payments.

via Bank of America Begins Mortgage Principal Reduction Program Under HAMP.

Who is eligible for principal reduction?
The revised HAMP principal reduction program is designed specifically for the approximately four million U.S. homeowners who are responsible borrowers with reasonable mortgages. It does not offer protection for people holding million-dollar mortgages, speculators, and owners of vacation homes. It is recognized that some foreclosures are inevitable for those who simply bought a more expensive house than they could afford. Homeowners who intend to apply for a HAMP loan modification must meet several qualifications:

• You must be able to demonstrate financial hardship
• You must live in the home
• The home must consist of no more than four units
• Your mortgage balance must be less than $729,750 for a one-unit home. If the home has more than one unit, this cutoff amount increases
• You must have taken out your first-lien mortgage on or before January 1, 2009
• Your monthly mortgage payments must be greater than thirty-one percent of your income
• The home must be worth at least fifteen percent less than the amount of your first mortgage

Unemployed homeowners
Unemployed homeowners may qualify to have their monthly mortgage payments reduced or eliminated for three to six months while they look for work. To qualify they must:

• Submit proof that they are receiving state unemployment insurance benefits
• Within the first ninety days of mortgage delinquency the homeowner must request temporary assistance
• Meet HAMP eligibility guidelines, including being under the loan balance maximum and the owner occupying the house.

Qualifying  for a HAMP program while on unemployment means that the homeowner may be able to get their home loan payment down to 31% of their income. Federal Unemployment maximums are around $2,000, meaning that the new loan payment could, in theory, drop to $620 per month.

When the temporary assistance period ends, homeowners whose mortgage payment is more than thirty-one percent of their monthly income and have found employment are eligible for a HAMP loan modification. The modified loan must pass a net present value test, and the homeowner must verify qualifying income and be up to date on their forbearance plan payments.

Bankruptcy
If the borrower or the borrower’s bankruptcy counsel asks for help, the new guidance requires servicers to consider a borrower in bankruptcy for HAMP principal reduction.

What should homeowners do?
If you believe that you qualify for a HAMP loan modification because your primary residence is worth less than your mortgage and you are experiencing financial hardship, contact your lender immediately. You should be aware that lender participation is voluntary; except for servicers of loans owned or guaranteed by Fannie Mae and Freddie Mac, your lender is not required to participate. If you are not sure if your loan servicer is a participant, check the federal government list at makinghomeaffordable.com/contact_servicer.html. If your lender or servicer is not part of the program, ask them about other options that may be available.

For more updated information on principal reductions, check out the latest on the mortgage relief project.