If you are lucky enough to have a loan with a lender that is included in the California Mortgage Settlement, you may get some great news in your mailbox. What do you have to do to receive it? Open your mail. Yes, it is that simple. Bank of America is mailing some fortunate borrowers letters forgiving all of their debt on their second mortgages. I am usually the one who reminds people that if it is too good to be true, then it probably is. This is one of the cases where it is true. The one hitch is that you check with your accountant to make sure you will not owe taxes from the debt forgiveness. There are some exceptions to owing taxes but you should at least look into the tax issue.
Also, more of the big five lenders (Chase, Bank of America, Wells Fargo, GMAC/Ally and CitiFinancial) are entering into actual loan modifications where they want to modify your loan so the lender will get credit under the mortgage. Some of these mortgage modifications are also getting principal reductions in the process. Why? Because the banks have to meet certain quotas in the mortgage settlement so they are motivated to do the loan mods and principal reductions. Many of my clients who have been denied a loan mod numerous times are getting loan mods now.
If you want to learn more about the California mortgage settlement, go to the California Monitor’s website.
So, what is my final free advice? If your home is underwater and you have one of the big 5 lenders, try for a loan modification again. You never know, today may be your lucky day!