Law as career

Platinum Law Group: Basics on Consultants by Platinum Law Group

A consultant , from the Latin consultare means "to discuss" from which we also derive words such as consul and counsel . Platinum Law Group describes a consultant as a professional who provides advice in a particular area of expertise such as management, accountancy, the environment, entertainment, technology, law, human resources, marketing, emergency management, food production, medicine, finance, life management, economics, public affairs, communication, engineering, sound system design, graphic design, or waste management.

Platinum Law Group points out that a consultant is usually an expert or a professional in a specific field and has a wide knowledge of the subject matter. According to Platinum Law Group , a consultant usually works for a consultancy firm or is self-employed, and engages with multiple and changing clients. Thus, clients have access to deeper levels of expertise than would be feasible for them to retain in-house. Also, this enables clients to purchase only as much service from the outside consultant as desired.

Platinum Law Group has learned that 'Consultant' is also the term used to denote the most senior medical position in the United Kingdom, Australia and Ireland (e.g., a consultant surgeon).

Ways in which consultants work

Some consultants are employed by a consult staffing company, a company that provides consultants to clients. Platinum Law Group notes that this is particularly common in the technology sector. Consultants are often called contractors in the technology sector in reference to their employment contract.

Strategy consultants are common in upper management in many industries. There are also independent consultants who act as interim executives with decision-making power under corporate policies or statutes. They may sit on specially constituted boards or committees.

Much has been made of the 2% base rate included in the guidelines for the Obama Administration’s “Making Home Affordable” plan. It’s been well documented that the plan is off to a very slow start with current estimates of approximately 50,000 loan modifications in process. Less talked about, at least so far, is that the 2% headline interest rate of the plan may be unavailable to most homeowners seeking loan modifications that follow the plan’s guidelines.

As the saying goes, “The devil is always in the details” and Making Home Affordable has a detail which goes by the name of the “Net Present Value” test. Many of the mortgages which were originated during the boom in real estate, including those considered to be toxic, were sold to investors on Wall Street, from pension funds, and insurance companies (like AIG). These investors didn’t have the infrastructure or experience to collect payments, prepare statements, etc. so they left the handling of those matters to loan servicers like Saxon Mortgage (now a part of JP Morgan Chase). These servicers interface with the homeowner on all matters, including home loan modifications. For that work, they receive a small percentage off of each of the homeowner’s monthly mortgage checks as their fee.

An unintended consequence of the meltdown in real estate prices and skyrocketing default rates is there is now a conflict of interest between servicers and the investors that employ them. The foundation of that conflict is this; with monthly mortgage payments functioning as the lifeline of the servicers, their priority is to keep those payments going. To that end, granting loan modifications, even with drastic cuts in interest rates, is a much better outcome for the servicer than not receiving payments at all and/or having the home go into foreclosure. Aggressive loan modifications which benefit the servicers often hurt the investors by forcing markdowns on value of loans in their portfolio, hence, the conflict of interest.

Having experienced this conflict prior to the unveiling of Making Home Affordable, investor groups insisted that the net present value test be added to the plan to protect their interests. A net present value (NPV) calculation works this way:

1) Determine the proposed monthly mortgage payment for the life of the modified loan
2) Calculate the total return in dollars over the life of the loan – monthly payment x 12 months x 30 years = total return
3) Estimate the value of what the foreclosed home would sell for at auction
4) The highest number between the total return and the estimated selling price at foreclosure determines what action will be taken.
Motivated to keep properties generating monthly payments and out of foreclosure, servicers will negotiate the highest interest rate possible, within the constraints of the plan and what the homeowner can afford, to generate higher fees and to make sure that the net present value test comes out on the side of loan modification. With higher fees and the net present value test driving the negotiations in a loan modification, granting 2% interest rates becomes a very low priority and in some cases a deal killer for the servicers.   Continue reading “Why you may not get that 2% interest rate by feldman law center” »

You may have a number of questions regarding loan modifications and how they can help you avoid foreclosure.  Loan modifications have been all over the news lately.  President Obama has passed major, historic legislation giving homeowners more access to loan modifications; the California legislature has also passed legislation promoting loan modifications.

Here are some questions and some answers for loan modifications:

Q: What is a loan modification? Continue reading “Feldman law center – loan modification faqs” »