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FAQs
What is a loan modification or loan workouts? Loan modification and loan workouts both mean the same thing. A loan modification is a way to help homeowners avoid bankruptcy when their largest financial burden is the monthly mortgage payment. Many Americans do not expect or want to be bailed out by the government with a bankruptcy or lose their home to foreclosure. With a loan modification, the homeowner is simply agreeing to a change in the original terms of the loan with the existing lender. The new terms are accepted by both the homeowner and the financial institution. The lender and borrower both benefit from a loan modification because the homeowner gets to keep their home and the bank avoids the lengthy process of foreclosure. Some of the characteristics of a loan modification are interest rate reductions, extensions of loan periods, the reamortization with capitalization of arrears by recasting missed payments, a reduction of principal balance, and deferred junior mortgages. Why are loan modifications so popular right now? Many families tried to take advantage of the rising home prices before the recent decline to secure the potentially growing equity with low monthly payments. With the combination of a slumping economy, unemployment rates rising, home prices dropping, and high mortgage interest rates, there are large numbers of families having difficulty making their mortgage payments. Now that prices of homes have dropped, banks want to avoid a financial disaster. Lenders do not want to be stuck with a large number of unoccupied homes that produce no income or repayment of the original loan. |
Will you challenge my original loan documents? Our Affiliates handle the Loan Modification themselves, however, they will typically prefer to negotiate with the banks based on the change in your particular loan and changes in your personal life. It is true, due to the extensive amount of paperwork needed to secure financing that errors often occur. This is something to be considered but not counted on. As part of our services we will conduct a forensic loan document audit to look for any errors in the loan process. Errors may include problems with the original loan documents or lender compliance with procedures mandated by statute. Will a loan modification or inquiry to a loan modification affect my credit? No, your lender is required pursuant to The Real Estate Settlement Procedures Act, to respond to any inquiries or disputes you might have with your loan. The borrower is also allowed to challenge the amount of the claimed default during the three year statute of limitations. The lender cannot ignore your requests they are mandated to respond with a specific time period. The time period is triggered by a valid Qualified Written Request. What is the difference between a loan modification and forbearance agreement? |
What does the bank take into consideration for a loan modification? The lenders realize that you are a homeowner and not just a file. It is the person that works hard everyday to make mortgage payments and provide for a family that keeps these banks in business. Circumstances arise in life that are not foreseeable such as declining home prices, slumping economy, family illnesses, temporary unemployment, childcare, reduction in income, possible litigation for predatory lending, and most recently pressure from the federal government. Most importantly, the bank will want to review your financial statements to verify that if a loan modification is completed you can follow the new terms. Can a homeowner contact the lender on their own? Yes, however an advocate who is trained in extracting useful information from you and then applying it in discussions with a lending institution with which there is already an established relationship is where the difference is made. A lender is less likely to modify the terms of the contract with a person that has had problems before and who has not had everything reviewed by legal counsel. Reviewing the new terms of the loan should be done by counsel. The biggest purchase of most people’s lives should be reviewed with scrutiny, as the original loan was not and contributed to putting the homeowner in this situation. What about payment of penalties and past due statements? All of the penalties and past due statements are considered in the loan modification. Lenders often will either waive penalties or incorporate the past statements into a new loan amount to be paid over the course of the loan. |
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| NEWS: Better Business Bureau Issues Foreclosure Scam Alert The vultures have begun to circle the increasing number of U.S. homeowners facing foreclosure. The Better Business Bureau has received complaints of foreclosure scams from every state and is warning consumers to be on the alert. The current foreclosure crisis has been deemed one of the worst in U.S. history. A record number of people have already lost their homes, and more are expected to follow as interest rates reset and home prices continue to fall. Homeowners are especially vulnerable right now, which means the opportunities are ripe for con artists who claim to offer foreclosure rescue services.
| Can I wait until the last minute, shortly before a scheduled sale, to do a loan modification? The banks are more willing to work with homeowners who are taking a more proactive approach in resolving their debt. The paperwork and elements to review are extensive to be considered in only a few days. Nobody likes to be rushed. Once a sale has been held and the hammer falls at auction, there is no possible way to modify the loan. It is our recommendation that you contact us no less than 30 days from the date of a scheduled sale. It is still possible to work with the lender but it affects your success. | |
| Watch out for "Predatory Loan Modification" companies... The ads are popping up all over craigslist. Next you'll hear them on satellite radio and see them advertised in your local real estate rag: "Become A Loss Mitigator" "Enter The Exciting Field of Loss Mitigation" "Become a Certified Loss Mitigator" (that one always tickles me). Most of those people will be fly-by-nights looking for an easy mark who is severely down and easy to fool. Technically speaking a Loss Mitigator works for a lender and has years of experience in the high finance world. They are charged with making sure the lender doesn't suffer any loss. To say they don't care about the borrower is not true but to say they care less about the borrower than the lender is more accurate. Ask yourself when you see the words "loss mitigator" this question, "Who's loss?" Are they concerned with your loss? Are the concerned with the lenders loss? Here is the elephant in the board room issue: If the person calling themselves a "loss mitigator" is not either sworn to protect your loss or paid to protect the lender's loss then they are not a loss mitigator at all - they are an opportunist. It may not be that they are looking to take advantage of you (although it's likely they are) but to take advantage of your situation. The new breed of "third party loss mitigator" is actually an old breed of what my dad would have called an ambulance chaser. Now, is it bad to chase ambulances? That's for YOU to decide. This new breed of independent "loss mitigators" wants one thing: for you to sell your home and for them to profit from the sale of your home. Honestly they really don't care about you or the lender so in actuality and by definition they are not mitigating loss nor are the charged or trusted with mitigation of loss.ou promised guarantees Absolutely DO NOT sign any document that transfers ownership of your home unless this is what you want to do and you are sure about it. Check with your local BBB or Chamber of Commerce for any negative reports about the company. Always get the terms of your deal, guarantees, costs or promises in writing. | ||
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