Is Loan Modification a good idea?
Submitted by tomandkathy
from CA
- 02/26/2009 - 6:59pm
I plan on retiring this year and my salary will be about 1/2 of what it is now. My husband works construction and is sporadically unemployed. I want to lower my payment and position myself better for retirement. I cannot refinance because equity has shrunk to 10-15% and PMI would wipe out lower interest rate/pmt. We have assets and a great credit score. Is it a good idea to pay a loan modification company who partners with attorneys to modify out payment?
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I can't honestly say. I'm hearing a mix of feedback on loan mods right now. I know of one gentleman with a couple million in the bank that just got the principal balance on his loan reduced by $200k and got a lower interest rate for a $3000 fee to an attorney. On the other hand I understand some folks who really need a loan mod, have paid as much as $5000 to loan modification companies with no results whatsoever.
I am told that one thing that can make a difference is if the loan company made errors in your original loan documents as that may give a good attorney a better negotiating postion.
Finally I'd be very leary of any loan modification offers you get in the mail, especially if they make seemingly unrealistic promises.
My wife and I purchased a property in Orange Ca. in 1999 with a small house on a 1/3 of an acre zoned R2-6. We took out construction loan to build my wifes dream home in the back part of the property. The construction costs ended up being $200k more than originally planned. Needed to take out 2nd to complete finish work. The property is amazing but unfortunately our mortgages total $5900 mo. Almost 70%of our gross income. We have had to drastically change our lifesyle and we have made every payment 3yrs running until Oct 08'. We were told unless we were delinquent we did not qualify for the loan mod. We did not pay for 3mo and they were now willing to attempt a loan mod only if we became current. We did this and now they are dragging their feet regarding the mod process. An emergency request was overnited this past week from the principal lender. It appears our loan was sold and the new lender could not find all documents. We come to find out our original loan mod(trust deed) at the construction completion was never signed by the lender and never recorded. The new lender has been daily calling and pleading with us to sign a new document for them. It is funny how they were so hard to get a hold of and delaying us when we needed them. We now are holding out for the loan mod terms we are happy with because the oversight on the original lender has given us a huge bargaining chip. They are aware that the courts recently in California are not sympathetic to the blunders, mismanagement and the predatory lending tactics perpetrated upon the consumers.
Jmusgrave - sounds like you are playing a good hand - I have an attorney who is an ex federal prosecutor who can help if you get to a place of frustration with the mod or want an attorney opinion. I, too am in Orange County and think it would be great if they work with you for an affordable payment - You have the tenacity to see this thru. Can you imagine the millions who are put on hold and told countless stories of why they arent getting a mod or the paperwork is lost, etc.
Good luck with that and let me know if you want the bulldog attorney to help or if you know anyone that can use assistance with a short sale (typically, some one who has deep hardship or was turned down for a loan modification.)
Bob
949-600-5404
bob@inspiragroup.com
A loan modification can be a big help to anyone who has problems with their credit standings especially when you can't manage to pay for your loans anymore. Yes, loan mod is a good way to stop bad credit in its track but you have to be ready for it. You need a good DIY loan modification kit and it's probably one of the best tools you can have before you get to apply for a loan mod.
My mortgage company was not willing to work with me. I tried to do this myself for weeks, but could not get anything accomplished and I just wasted my time sitting on the phone. Modifyit4less.com really taught me how to work with loan mods. They told me exactly what to say to the lender and how to lower my interest to and my overall payments more than $700. I could not believe it. They saved my home. !!!
It is encouraging that we are starting to hear of some great modification success stories. We always caution people to be weary of anyone charging an advanced fee. Always remember that you can go to www.makinghomeaffordable.gov and find a list of HUD approved counsellors that will help you for free. Just remember that things are changing every day and there is always hope!
Earlier this June, my wife and I started looking at modifying our adjustable mortgage with Bank of America. Several calls lead to B of A eventually saying they would "remedy our situation". The ending result was terrible. I was asked to fax in documents at their request, to which they would later claim that "nothing ever came in”. The customer service representatives were also very rude, as they tend to hang up whenever talks went south. So, then I came across Modify It 4 Less, which provided me with software and services that allowed me to have full control of the entire loan modifying process. The fee to use the software was reasonable and involve no attorney intervention whatsoever. Their customer service was respectable and top-notched, and three weeks later I got a modification! They literally saved my home! Check them out, maybe they can help you with your needs.
Yes, loan modification is a good idea if you want to save your home and you qualify under either HAMP, 2MP, or a traditional "in house" loan modification with your lender. The process can take frustratingly long, but if you are approved, your mortgage payments will become affordable proportionate to your income. You can do it yourself, but you'd better be confident about your negotiation skills as well as your follow up and administrative skills. If not, you're better off hiring an experienced and legitimate professional to do it for you. Make sure they can prove a successful track record before you sign up with them. Your credit will suffer, but hey, that's the price to pay for peace of mind in being able to afford your mortgage and keeping the roof over your family's head. Credit can be repaired overtime. Good luck!
BE VERY CAREFUL WITH THOSE MODIFICATIONS!!!!! YOUR HOME COULD BE SOLD AND YOU'LL BE FOUND ON THE STREETS WITH YOUR FAMILY. WE'LL SUE EVERYONE RESPONSIBLE FOR ALL THE FRAUD AND BUSINESS AND PROFESSION CODE VIOLATIONS!!!!!! CONTACT ME ASAP @ (630)608-7046
Unfortunately loan modification was something that is a farce and was just something the lenders were forced into by govt and public outcry. Results were, they quickly learned that they could suck up all the free money the govt put out (our money) and never had any real intentions of helping us.
The only option opened to homeowners who really want to stay in their homes is to sue their lender.
Paul, you are more right than you can imagine. I have been fighting with Bank of America since April of 2010 after filing for request for modiccation of loan. I have had file closed 6 times for inexplicable reasons (tip: write down everything they say or record conversations as home retention agents lie, lie, lie!) and been denied twice. My file just got closed again in April after reopening the modification on March 30. Note in file said they "couldn't contact me." I have heard this exact statement at least 10 tens and suddenly realized many of their statement are coming from template or "help sheet:' that agents are given to respond to customers. Finally got file transferred to office of the president this week and was assigned to great guy who was very apologetic and reopened the file. Have heard this is the ONLY way to get loan modification through Bank of America. In the meantime, I filed complaint with helpwithmybank.gov at urging of HUD counselor and have given notice of violation of Section 504 of Rehabilitation Act as HUD counselor and I believe that Bank of America is doing shenanigans with me due to disability. And so....let the games begin!
ooops.....meds are making fingers like spaghetti. Above sentence in paragraph should have read. . ."I have heard this this exact statement ten times. . ." Couple of other typos but I think you can read the rest of it.....sigh.
I'm a firm believer that the loan modification process is a farce and the only reasons they give loan mods is because of the public outcry for help and that the banks want to protect their reputations. I believe that there has been less than 10% who have received loan mods since the program has been in existence. I believe that speaks for itself. I myself lost my home because of the bu shit they hand out. Did you know the government pays the lenders upfront money to start the process, but, know regulations or control over the process. You could everything right and still find yourself on the streets. I found a site that I believe is worthing looking at and taking seriously. You need to take the bank and lender out of their position of power and level the playing field. I wish I would have checked this alternative out. Give me your opinion visit: http://www.screwyourmortgage.com. I look forward to your comments.
HI Paul,
I took a look at your site and it appears that you recommend suing your lender. Ultimately this will delay the foreclosure, possibly force a modification or short sale of the home. We discuss this tactic in our webinar on Legal Docs and Scandals under the Support and Training tab above.
Although I am a firm believer that homeowners should fight the good fight there is also something to be said for pulling the band aid off quickly and starting the healing process. Most people in foreclosure are in homes that they cannot afford and their quality of life is atrocious as they live with the ticking time clock in their ear. Keep in mind that all of the economists agree that we probably will not see steady increases in value until 2014. That means that people who short sale or foreclose today and begin to rebuild their credit will be able to qualify for a new loan through FHA in 3 years. They may be able to buy a similar property for the current market or maybe even a better home for less money in 2014. Those that delay the process may still be fighting when the market gets better. There are a lot of folks that made personal financial mistakes and overspent during the Roaring 2KO's and have found themselves in quite a pickle. The question is...do you keep banging your head against the wall or do you cut bait and move on? Every time you fly in an airplane they say the same thing "put your oxygen mask on first". I believe that people need to take care of themselves FIRST and make a decision that is right for their families and not worry about the "punishment" of the banks or the unfairness of the rules. If you are going to fight and sue your lender that is great but remember that there is a price you pay and that may mean living in a perpetual state of foreclosure for a while. At the end of the day you may be right and you may have a case but you will spend a great deal of valuable time fighting the process for an unknown outcome. Consider your quality of life first and then make a decision. I pass no judgment on those that fight or those that walk away as long as they did what they felt was best for them.
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