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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.
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