Miami Foreclosure Watch: Will Ocwen’s Loan Modification Program Work?
Many have been hailing Ocwen’s loan modification in Miami and across the country as a novel way of addressing the crisis.
Our Miami loan modification attorneys have experience in handling Ocwen loan modifications, and we’ve been able to leverage significant principal reductions for our clients. This means they are now paying a fair market value rate, rather than the inflated rates they had previously been paying.
Through Shared Appreciation Loans, the financial institution lowers the principal balance, gives homeowners another chance to keep up with more realistic payments and then asks for a portion of the appreciation proceeds if the home is refinanced or sold.
But is it going to work?
Well if the figures from the pilot program in Illinois are any indication, this could be a turning point in the housing debacle – and possibly, our overall economic recovery.
In Illinois, the foreclosure landscape varies slightly from here in Florida, but the concept for implementation is going to be essentially the same. So in Illinois, there are more than 20 percent of homeowners who are underwater on their homes. That means that a fifth of homeowners there owe more on their home than what it is actually worth.
Ocwen holds more than 455,000 mortgages across the country. Of those, about 15 percent are underwater. Florida is in the same boat as Illinois in terms of having a higher percentage of underwater homes than average.
So of those who took advantage of the program in Illinois – which was about 80 percent of those eligible – less than 3 percent defaulted.
That’s a pretty promising success rate, particularly given the fact that other federally-sponsored home loan modification programs have default rates that stand at somewhere between 40 and 50 percent.
Those in charge of the program say giving homeowners an actual positive equity is important on a psychological level, and ups their motivation to stay current on their payments.
What’s also encouraging is that there is no cut-off level for the amount of negative equity the servicer is set to go. That means that even if you have a loan-to-value ratio that tops 150 percent or more, there’s a good chance you might still qualify.
Of course, the downside is that as of right now, it only applies to those who have mortgages that are serviced by Ocwen. When we look at the national figures, we see that’s actually a relatively small percent. Figure that there are about 11 million property owners who owe more on their homes than they’re worth. Of those, about 2 million are at serious risk of going into foreclosure.
Ocwen is a large mortgage servicing firm, but it still only holds about a half a million mortgage loans, and of those, 65,000 are underwater.
So even if this program does end up greatly assisting Ocwen customers, the rest are still going to be struggling.
It’s important for you to know, however, that if you are an Ocwen customer, you shouldn’t take your chances in hammering out a deal with them directly. In most cases, our Miami loan modification attorneys can help you negotiate a rate that will be most favorable to you.
If you’re battling foreclosure in Miami or the surrounding areas, contact Jacobs Legal for a confidential appointment to discuss your rights. Call 305-358-7991.