One reason is that figuring out whether to stay or walk requires calculations too complicated and time consuming for the average homeowner to perform. For those who don’t want to do the calculations themselves, the online “Does It Make Financial Sense To Walk Away & Rent?” The calculator at YouWalkAway.com can help.

Just enter in your home’s value, what rent you would pay for a comparable home, your annual mortgage tax savings, your housing debt and mortgage interest only payment, how long you plan to stay in your home and expected depreciation or appreciation of your home, among other figures. To estimate your home’s value, the site Zillow.com and this Home Price Calculator can help. To estimate depreciation or appreciation, the average of how much your property would go up or down over the designated years you would plan on staying in the home, you may want to stick with the historical appreciation rate of around 3 to 4 %, Professor White said.  The calculator will then tell you how much you’ll save or lose by walking away. You’ll need to decide whether the savings, if any, are worth walking away. In making your decision, you may also want to consider foreclosure costs and the impact on your credit as well as other factors in the equation.

According to Professor White, even if it would make financial sense to walk away, many people don’t because of emotional constraints, including the desire to avoid shame and guilt as well as an exaggerated fear of the consequences of foreclosure — emotions encouraged by everyone from the government to the media. “This moral norm is perpetuated by all kind of institutions and individuals,” Professor White said. How much would you save or loss if you walked away? Will you stay or walk?  Article was written by JENNIFER SARANOW SCHULTZ

When it comes to loan modification plans, the industry is crowded with many self-proclaimed “loan-modification consultants” who often end up being scam artists.  Hopefully, Arizona’s new law will help eliminate the loan mod companies profiting on their scams that have given good loan modification companies a bad name in Arizona.  Do your research when considering a loan modification law firm or foreclosure prevention lawyers.  The article was written by Bob Hertzog who is a mortgage broker operating in Phoenix, Arizona.

Ohio attorney general Richard Cordray singled out Uri Gofman of Beachwood, Ohio, as the scam’s ringleader, saying he enlisted family, friends and others to invest in his real estate company, Real Asset Fund, with promises of profit. Mr. Gofman’s alleged enterprise began with seed money from an investor who transferred funds from a bank account in Latvia.

The scheme involved using straw buyers to purchase homes, falsely claiming home improvements were performed on houses in order to refinance them and then selling houses to unqualified buyers with the assistance of real estate agents, mortgage brokers and title companies. The defendants, who were unavailable for comment, allegedly siphoned off more than $31 million in profits from their criminal enterprise. Eventually, 358 of the homes fell into foreclosure. The Cuyahoga County Mortgage Fraud Task Force was formed in December 2007. To date, 289 defendants have been indicted on mortgage fraud charges involving $111 million in loans on 812 homes, 616 of which are now in foreclosure.

The Obama administration’s program has two parts: one to work with lenders to restructure the loan terms for up to 4 million homeowners; the second, to refinance up to 5 million homeowners into more affordable fixed-rate loans. For the loan modification program, borrowers who are eligible will have to provide their most recent tax return and two pay stubs, as well as an “affidavit of financial hardship” to qualify for the loan modification program, which runs through 2012. Homeowners are only allowed to have their first and second mortgage loans restructured once, and the loan relief program is only applicable for home loans that closed prior to January 1 2009, or earlier. Home mortgage loans for single-family homes that are valued more than $729,750 are not eligible for the federal loan modification plan.

There was also skepticism that mortgage lenders and banks would be willing to participate. “I’ve just seen so many of the refinancing and foreclosure prevention programs not work,” said Jason Cardiff, president of Kelly Media Group, a full-service marketing company that services mortgage lenders, law firms and loan modification companies. Cardiff continued, “Southern California borrowers with mortgages above the $700,000 loan amounts are not excited that they have been excluded from this financial relief funded by the recent stimulus package.” Mr. Cardiff was asked about the fairness of the mortgage relief bill and he responded, “No it’s not fair, but helping some borrowers is better than not helping any homeowners.”

According to the federal Office of the Comptroller of the Currency, 58% of mortgage loan modifications done in the first quarter of this year have re-defaulted, and fell delinquent within the first eight months of the year. Diana Olick, CNBC’s real estate correspondent, believes the government should let bad credit mortgage loans go into foreclosure instead of implementing mortgage relief.  She doesn’t believe that home loan modifications work and her idea is to get good credit borrowers who can afford the properties to purchase up the homes. However, Steve Liesman, CNBC’s senior economics reporter, said widespread mortgage modification is the key to fixing the foreclosure crisis.

Alexendria Craig is about to lose her home after taking out a series of high rate mortgage loans that left her deep in debt. She says the home loans “helped balance out what she fell behind on with her delinquent mortgage payments. Her salary as a paralegal for Los Angeles County was not enough to make ends meet. Desperate to hold onto her house, she responded to a slick advertisement that turned out to be too good to be true.  Craig agreed to pay $30,000 and to share title on her home to a foreclosure rescue company. The mortgage relief company promised they would use home equity in her house to pay off her high rate debts and that they would make sure that her credit would be repaired. After a year she believed that she would get her property back.

The foreclosure prevention company’s agreement promises that clients have “sufficient equity in your home” for “paying off debt liability,” “repairing your current credit,” and most importantly that they’ll “remain in your home without further concerns or worries.”   It’s a classic foreclosure rescue scam, says attorney Debra Zimmerman.   “There should be a huge red flag for anybody who offers to do this for money, because there is no reason to pay for help,” said Zimmerman, of Bet Tzedek Legal Services. She said “loan modifications could be done for free,” but Loan Modification Buzz reminds you that “you get what you pay for.”  If you seek formal mortgage relief, seek legal advice from an attorney-backed loan modification company.  Seek counsel from foreclosure lawyers who understand state laws regarding foreclosure, debt relief and loan workouts.

In the typical scam, the homeowner transfers title to a third party who promises to secure a lower interest rate on the mortgage. But what often happens is the third party cashes out the home’s equity, leaving the homeowner as a renter.   “This is the American dream, and they’re losing it. And somebody is coming and they’re going to rescue them,” Zimmerman said.

In California so many people have fallen for these foreclosure prevention scams the attorney general has issued a consumer alert. But that warning came too late for Alexandria Craig. Her house is in foreclosure, and next week she’s facing eviction. Both the foreclosure rescue company and the bank foreclosing on her house deny any wrongdoing.  “You feel like you’re drowning and you feel like there’s nobody sending you a life raft,” said Craig, sobbing.  Barring a miracle, Craig says she’ll be moving into her car on next week, losing family memories and her American dream.

Borrowers who are burdened by subprime mortgages, bad credit, and home value depreciation are eligible for loan modification. Once mortgage lenders are already informed of the borrower’s intention to have his loan modified, necessary papers and documents should be furnished and turned in for the lender’s perusal. One of which is the hardship letter required to get a loan modification agreement. It is simply the borrower’s detailed explanation of his current financial difficulties including the reasons that led to his hardships in terms of money. Pieces of evidence and documents that prove such claims should also be given to the lender. All loan companies who offer loan modification require such letter and only those with valid reasons are granted this service.

So how do you exactly write a convincing hardship letter for your loans to be modified?

1. Exude a professional, sincere and humble tone in writing your letter.

Your lenders have heard every sob story there is and know every trick that borrowers have in mind. Begging for pity in your hardship letter is usually not a way to have them convinced. Lenders are usually very strict and unyielding to borrowers who appear too broke and dramatic about financial difficulties. Chances of being granted with loan modification are going to be slim if you include a farrago of overly stagy and melodramatic stories in your letter.

2. State reasons that include one or more of the following:

o    Death of the family’s bread winner

o    Major medical expenses

o    Loss of income of salary deduction

o    Property tax increase

o    Serious illness

o    Childcare expenses

o    Unavoidable home repairs

The aforementioned are usually the ones credited by loan companies as valid reasons for loan modification. You should provide a clear explanation of the circumstances that led to your problem. Likewise include the aftermath that these problems have effected in your financial situation.

3. Your letter must be brief.

Don’t beat around the bush because your mortgage lender already has an idea of why you are initiating contact. Instead of trying to write a flowery letter with loads of adjectives and adverbs, concentrate on explaining your financial situation. That alone will get you far in your quest to having your loans modified.

By: Jen Franco Article Directory: http://www.articledashboard.com  Jennifer Franco is a creative writer, teacher and freelance language editor. She writes about a wide array of topics including art, culture, entertainment, cars and loan modification.