First, if you are underwater on a loan that is serviced by Ocwen Loan Servicing and are trying to avoid a Miami foreclosure, you need to contact our loan modification lawyers, who have been successful in numerous other instances in getting fair market value rates for once negative-equity Ocwen loans.
We know how to do battle with Ocwen so that you have the best possible chance at securing the best rate possible.
That being said, let’s take a look at what Ocwen is doing differently from other financial institutions.
It’s called a shared-appreciation mortgage. It’s also sometimes called shared-equity mortgage, but it’s been coined SAM for short.
The whole concept has been around for many decades, but it never really seemed to gain much steam here in the U.S.
Ocwen is one of the largest independent mortgage servicers in the country, so it is absolutely noteworthy that it is doing things a little differently.
A SAM is essentially a form of mortgage in which the lender lowers the principal mortgage rate to about 95 percent of what the fair market value is. What that does is give the homeowner a positive loan-to-value ratio. The homeowner can then keep current on his or her payments. It is believed then that a few years down the line, the home should appreciate at least marginally in value. When and if the homeowner decides to sell it, the bank will be entitled to a portion of that sale money.
So for example, let’s say you had a home that was worth $200,000. However, due to the housing bubble, your loan amount actually stands at about $250,000. At that rate, you’re underwater and your chances of defaulting are high. So in a SAM, what the bank does is lower your principal mortgage to say, $190,000. Over the next three years or so, the amount that they reduced your loan by is forgiven incrementally. That ensures that you stay there a while, and also that you will keep up-to-date on your payments. Then after the given time frame, if you choose to sell it, let’s say you do so for $210,000. That means you would give a portion of the profit – let’s say 25 percent or so – back to Ocwen Loan Servicing. So they get about $3,000 out of the deal, which is their way of recouping at least some of the loss they accrued by writing down the higher debt.
Many people are lauding this as a great way to address the housing crisis on a widespread scale. And certainly, our Miami foreclosure lawyers believe it is a better approach than what some of the other large financial institutions have been doing (which typically amounts to the bare minimum).
However, as with any financial company, Ocwen, which has offices in West Palm Beach, is not doing it to be benevolent. Your best interests are not their No. 1 priority by any means.
So yes, a loan modification along these lines may actually be the best option for you. But you shouldn’t try to negotiate the terms of this kind of agreement on your own. Contact an experienced Miami loan modification attorney who can hash out the details for you.
If you’re battling foreclosure in Miami or the surrounding areas, contact Jacobs Keeley for a confidential appointment to discuss your rights. Call (305) 358-7991.