Understanding In house modification
Overview
A traditional in house modification is a program which is offered by many lenders usually these deals are provided by the in house underwriters & investors. Usually they do a risk assessment along with NPV analysis and offer this program to the homeowners who are struggling to make their regular Mortgage Payments.
A traditional loan modification is assistance provided by lenders through various "in-house modification' programs. But you may be required to provide some kind of upfront funds {Not always} to the lenders by way of "good faith deposits" to get an approval for this type of mortgage loan modification. This is how it differs from the loan modification provided under the making home affordable program. And the rate of interest provided on these modifications might not be as low as those offered on the government loan modification plans and the interest rates can also be variable throughout the term of the home mortgage loan.
There are various programs offered by the banks as in house modification, the most offered program offere by Ocwen Loan servicing is SAM Modification let us understand how SAM works and how a borrower can make use of this program
What does SAM program offer?
SAM would forgive the balance of the mortgage up to 95 percent of the prevailing market value. In exchange, whenever the homeowner pay off the loan-sell or refinance-the homeowner would share 25% of the home's appreciation that occurs after the loan modification with the lender.
Ocwen would forgive the balance in one-half increments on an annual basis. The initial results showed the program to be a loan modification success story.
- 79 percent of borrowers continued in the program
- 2.63 percent of the borrowers went back into default
Based on the positive results, Ocwen extended the program to the 33 states that allow the plan. The bank completes between 2,000 and 3,000 new SAM applications each month.
Advantages of SAM
The 2013 Ocwen SAM loan modification program represents an excellent example of a lender catering to the needs of its clients. SAM not only provides immediate financial relief to troubled borrowers, but the principal reduction aspect, which is missing from the HAMP, provides a powerful incentive for borrowers to stay in their homes and not exit their mortgages. Under SAM, keeping borrowers in their home is a "win-win" for lenders, the communities and the nation