BiggerPockets

It really depends on the lender...for example Countrywide will not work with an investor owned property for a modification. With the new legislation, the lenders are allowed to write off losses on OWNER OCCUPIED properties. They have no incentive to work with non owner occupieds. If you goto hud.gov and search the new "Special Forbearance" publication that just came out last week...it might help a bit to explain what's happening.

Truthfully don't know. But it's an entirely different ballgame month to month...as I am sure you know. It's a great investment opportunity if someone can figure out a system. But again, the lenders as of 8/1 can only write off a loss on the oo's. Might also tie back into the amount carried on the reserves mentioned in Mr Trumbader's(sp) post.

You must also consider that fact that the loan modification dept. is so overwhelmed with activity right now and they will give first priority to OO properties that can provide "proof of income" that they can afford the new note. I just had a friend who was turned down on a loan modification because his DTI would have still been over 43.

I had heard of some people getting Investment homes modified but was wanting to get a pulse on what others are seeing.

Unfortunately I think this is going to be more common. Good Credit and investors with some means walking on properties because the values have decreased so much.

Thanks for the input thus far.

Don

Wheatie,

I agree with what you are saying. I guess the only challenge that lenders are creating is all the REO's and short sales in this area are going so cheap that they are destroying their collateral and any equity borrowers have even very conservative people that pay their bills and always have.

I can see lenders not caring about the investor etc. But the house or collateral is still theirs and by them destroying market values it just puts them in a situation to get more homes back.

Then you have your average joe that loses his job. He has always paid his bills he put 20% down on his home. Did a normal 30 year fixed loan and he goes to move and realizes he is 50K upside down in his house.

I think this is the situation we will be in for years. Average Joe will walk. Bank gets house back. Further discounting of real estate. Probalby not in all area's but in mine for sure. Until prices get in line with incomes and rents.

Sorry I got off track a little. I agree banks would be more willing to work with owners than investors but in the end they should probably be working with both.

Don

I am a Loan Modification Agent and I work for an attorney-based loan modification company. Our company has succeeded in dealing with lenders for investor clients...the best thing that they should do is to have a lawyer look at their file to see it they can negotiate for them. NEW CHANGE as of last Thursday, lenders are now starting to run credit history. It is still not FICO score driven, but they just want to make sure that applicants are not buying cars and applying for loan mods just because they can get away with it.

Thanks!
Glena

I believe it's worth a shot to talk to the lender. Several factors to consider: Who is the legal mortgagor or the type of entity? Is there a guarantee? How long would a foreclosure take to obtain title? Does the bank have a Deed In Lieu of Foreclosure in place in the event of default? The foreclosure process would require the mortgagee to move quickly to obtain a Rent Receiver to take control of income. Yrs back I worked for an owner who tried to convert to condos 147 units. Late 80's - wouldn't fly-negative cash flowing property. He contacted Citibank - they did an asset verification to be sure there was nothing substantial to take. When nothing turned up they took a Deed in Lieu and my employer's credit remained intact with no blemishes. It never hurts to try.

I've learned that lenders are definately less sympathetic toward investment properties when it comes to loan mods. A huge compensatiing factor that presents a good chance of getting approved for a loan mod is if you have renters living in the property. That changes the game because now it is income and it effects your DTI, which is a very important component in determining whether you get approved or denied.

Jonathan, this may be a stupid question, but did you take your experience as an inside loan mod person and translate it to the other side of the desk, so to speak, and now you do loan mods for homeowners?

Some good answers here, but no one mentioned the "hardship" that is required to do a loan modification, even for investors. Just the fact a property is upside down and the investor made a bad investment is NOT a hardship. The same goes for a short sale also. If an investor is showing large balances in checking/savings or CD's...this will not help when a lender goes to modify. They truly need a "temporary" income hardship to qualify, though it CAN be done for investors as much a OO's. We do them all the time...sometimes in "bulk" with the same client but different lenders.

This is propbaly the "fastest" growing segment of the loan modification business, as savey investors see the benefit compared to a short sale or worse, walking away!