A Loan Modification can either be a permanent change in one or more of the terms of a mortgagor’s loan, or allow a loan to be reinstated and results in a payment the mortgagor can afford. Find out if you are eligible and the procedures by reviewing this helpful information published by the U.S Department of Housing and Urban Development http://portal.hud.gov/fha/sf/svc/loanmodfact.pdf . We hope you find the content useful and helpful for your situation.
Whether or not you are eligible under HUD guidelines, rates and terms as well as qualifying for a loan modification are at the lenders discretion. You have choices on how to go about attempting to modify your existing mortgage and you can certainly try it on your own as many do. If you would like the forms, example of hardship letters along with some sound advice, contact us and we will be more than happy to provide it for free. Some homeowners that are struggling with their mortgage payments or facing foreclosure may choose to hire a real estate attorney or search loan modification companies rather than going it alone due to the fact an attorney may drive a more positive result, or other avenues have failed. Navigating through the mortgage lender’s loss mitigation department can be difficult at times, similar to the stories told of the Bermuda Triangle. I mean things just disappear! Keeping in mind the lender or loan servicing company is just trying to collect a debt and make a loan perform for the investor. Debt collections is different than loan modifications being that people have been collecting debt for over a couple hundred years and doing loan mods for 6 months . I have heard horror stories from clients just trying to get through to loss mitigation departments by phone or worse yet once contact is made; lost faxes, poor results, declines, unaffordable forbearance agreements, or going into foreclosure. Remember…..the lender is mainly trying to collect delinquent payments, not give you 2.50% fixed for 5 years on a 5.00% 30 year fixed and knock $100,000 of your principal loan balance. Yes, these things may be possible. They are done on a case by case basis and must be properly negotiated to get the most favorable short and long term results. Hiring a qualified attorney is usually going to get better results.
Be very careful when doing a loan modification!
In many cases we have seen clients hurt themselves by telling or showing the lender certain things they shouldn’t. You must understand, the personnel in the loss mitigation dept. are highly trained at negotiating and collecting past due mortgage payments. This is why the lender will normally not consider a modification unless you are 3 or more payments behind. This is why the lender wants to see you have some money available to send them immediately and they will consider a modification after 3 months of higher payments made on time. Unfortunately, most of the time we see clients have defaulted again thus causing more fees and possibly back in the foreclosure process. A loan modification is a long term solution, modified forbearance agreements are designed by the lenders to just get paid. Of coarse they will negotiate with you to get caught up, requiring a portion of the arrearages to be paid up front to reinstate the loan or to stop foreclosure.
Be Very careful doing a Loan Modification with a Loan Modification Company!
There are several loan modification companies/loss mitigation companies advertising success rates, money back guarantees, large principal reductions, 4.50% 30 year fixed rates and I can go on and on…… and on. A company in Los Angeles boasts a “home equity leveling program” where you pay them $1500 up front for processing then 1% of the loan amount when they get you a huge principal reduction, with NO CRIDENTIALS….. Please! The worse I have heard was a company that tells you they freeze your payments for 5 months and you make reduced monthly payments to them while they negotiate with your lender. I mean, this so called attorney backed loan modification company is getting home owners to pay the ridicules monthly fees and getting no results. Let’s put it like this, just check with the Attorney Generals Office as there has already been cases filed against stop foreclosure and loan modification companies. I’m not saying that everyone’s dishonest or will stop at nothing to get a sale; I’m just saying that few are operating legally or know what they’re doing. Make sure to do your research, ask questions, and ask to speak with the attorney or better yet what his name is.
It’s unfortunate that most home owners are stuck in this spot in the first place that they would be taken again. Several loan modification companies boast the fact that an Attorney handles the negotiation or they are “Attorney backed”… “Attorney Assisted”…. “Attorney Based” or “Our In House Attorneys”. The sales people have titles like “loan modification specialist”, “loan modification expert” or “stop foreclosure consultant”; I find this quite amusing. Now, I may be partial because I’m an attorney and my law firm hires only experienced attorneys, paralegals and bank negotiators to handle client’s files. But the truth is, my staff is compassionate and knows what they’re doing. They know what a loan modification looks like and how to negotiate with the lender. Better yet, you are working with a law office.
What’s a real loan modification look like?
It should look like a 30 to 40 year fixed rate between 3.00% and 6.00% or so, allowing a borrower the long term ability to pay. If that is not affordable to the client there are other options depending on the investor, who is servicing the loan and the extenuating circumstances. Modifying the terms of the existing mortgage may also include a discounted rate fixed for a period of 1 to 5 years then gradually increase anually to a fair market fixed rate up to 40 years. A lender may also opt to reduce the principal balance or forgive part or all of a 2nd mortgage if presented with a valid case. Basically, a real loan modification will look like a reasonable long term solution for both parties, creating a “win-win” solution with a “make sense” approach. In certain instances lenders have lowered the interest rate as low as 1.00% to 2.00% due to extreme hardships and the borrowers desire to keep their home. States like California, Arizona, Nevada, Michigan, Ohio and Florida are leading the way in the current foreclosure crisis. Foreclosures through out the State of California continue to rise as home values are still declining. We typically recieve over 200 calls per day from California homeowners looking for foreclosure assistance. Foreclosure assistance is available at the Feldman Law Center and our consultation is Free and always confidential. We are located in California and we are experienced in California real estate, foreclosure prevention, lending laws as well as federal bankruptcy law
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California cities continued to dominate the top metro foreclosure rates in October 2008, taking six out of the top 10 spots for the month. Merced documented the No. 1 foreclosure rate, with one foreclosure filing for every 82 households — 6.7 times the national average. Stockton and Modesto took the second and third spots; Riverside-San Bernardino and Vallejo-Fairfield took the sixth and seventh spots; and Sacramento’s foreclosure rate ranked No. 9..
Our number one goal at Feldman Law Center is to help the state we reside in. The foreclosure crisis in California is not only affecting homeowners but it is affecting our local economy. We are dedicated to helping homeowners in CA avoid foreclosure with California loan modification by a licensed loan modification attorney.
If you are not sure that the company providing you with loan modification services is right for you then please call us. We know about foreclosure laws and your foreclosure rights. Do not get scammed by fly by night companies claiming to be on your side. |
