Loan Modification

Loan modifications are an interesting animal.  When you find yourself in a difficult situation, most lenders tell you either verbally or in writing that you might be able to modify your loan.  So you deal with the customer service from your bank for weeks and it seems like you get no where OR they offer to modify your loan for a very short time or with terms that just really don’t make sense.  But they (the customer service rep) are saying that this is the best they can offer.

What’s interesting is that as the market continues to shift, the lenders become more willing and flexible with modifications as the pressures of more foreclosures filling up the pipeline and legislation is passed to minimize the effects of foreclosure on the economy.  Likewise, as the market heats back up lenders will become less flexible because then their loans will be tied to appreciating assets.  They don’t have to be as flexible.

So the question is why are the lenders so difficult for YOU to deal with?  Why won’t they just cut to the bottom line and give you the best option available.

My theory on this is simple.  Their job is to minimize their loss.  So if they can get you to agree to terms that are in their favor, they stay ahead.  Also, as an individual consumer, it is unlikely that you even know what your modification options are.  And if you don’t ask, they darn sure won’t tell.  That’s why you need a professional negotiator working for you on your behalf.

So then the next step is to go find a company who modifies loans on your behalf.  And in case you haven’t noticed, there are a ton of them popping up. 
Who do you choose? 
How do you choose them? 
How do you know they are going to even get the job done for you?

Those are all great questions.  And the simple answer is that unless you truly understand the real estate market and have been exposed to all the different nuances of loan modification and the constant changing environment, you won’t know those things.

You could end up giving your money to someone like a person I interviewed recently. 

I asked them, how do you know initially if the prospective client (you) is qualified or likely to get a beneficial loan modification? 
Their response. 
We really don’t know!  And they cited a bunch of reasons like not knowing ultimately what the bank will do. 
So I asked them what happens if in the end they (you) don’t qualify for a loan modification and they’re stuck in the same old situation? 
Answer: "I don’t care whether or not I take their last penny and leave them homeless.  They’re going to give someone their money and it might as well be me."  
The guy I spoke to actually said this.  It blew my mind.   It made me angry. 
But, you would be surprised at how many of these people are out there.  In all categories of service.

Who are these people?  Some of them are mortgage companies who have simply switched from loan origination or added to their current operations the loan modification departments. 
As you look around at these companies, you can ask them if they used to offer the interest only no down payment loans that contributed to all this mess and interestingly enough, they say yes almost all of the time. 
So interestingly enough, they are now trying to modify the very loans they sold. 
Does that sound right? 
They gave these loans knowing that they weren’t the best and now they want more of your money. 
This makes me angry. 
Also, if you simply watch the news you’ll see stories of these very mortgage companies getting busted for taking up front money.  But in their eyes they are taking this money because it’s worth the risk. 
These are not people you want to end up with.
There are plenty of good companies out there.

Also there are attorneys who have jumped on the bandwagon and have become "loan modification experts". 
There are in my experience two types of these attorneys.  The first one is the attorney who sees dollar signs and sets up a boiler room operation with a bunch of under qualified non-professionals who are trained to sell you the services, collect a check and negotiate with the bank for the attorney. 
These operations are supervised by the attorney but not typically handled by the attorney until things get sticky.  The advantage to this is it that they usually charge less.

The other attorney is the one who has paralegals who are actually working on the files, the attorney makes the calls to the bank themselves and are hands on and knee deep in the process.  These attorneys are usually more costly but more effective.

We’ve interviewed these different companies and can direct you to the right one for your specific need.

Who is the Best Candidate for the Loan Modification?

First and foremost if you want to keep your home then you’re a candidate. 
Do you want to keep your home? 
If you’ve just decided you are done and want out, visit our section on short sales.

But loan modification in my opinion the best option for anyone who wants to save their home.

Again, I know you’re asking why can’t I just call the bank myself and the answer is absolutely yes you can.  But the failure rate for people who work things out directly with the bank is very very high.  In some cases I heard according to Congress it was in the 80% range for the same reasons I mentioned earlier.  When you have a professional negotiate for you, they know more about the options available and the guidelines and they are working for YOUR best interest not the banks.

OK, lets wrap up with the whys of loan modifications.
Your Benefits:

  1. Payments are more affordable for you.
  2. Terms are changed towards your benefits or ability to pay
    (example would be to change interest rate reduced principal balance)
  3. Saves your credit
  4. Saves your home from foreclosure
  5. Faster, easier, and simpler process
  6. Can be more affordable and a lot less expensive than a refinance

Lender Benefits:

  1. Will still have you making mortgage payments and therefore still profiting.
  2. Cut back on costs involved when property is foreclosed.
  3. Have less delinquencies or mortgage defaults in their portfolio.

 

Benefits of professional loan modification help vs. attempt to do it on your own:

  1. You have one chance to do it right. Therefore, having a professional take care of it will save time and money.
  2. The experts have the negotiating skills and know what will be asked by the lender and how to answer them.
  3. The experts can expedite the loan modification based on their knowledge and expertise.
  4. Frustration is taken from you when something as serious as possibly losing your home is handled by a professional.
  5. Modification doesn’t impact community’s home values (since the deed is not transferred)
  6. Debt can be "forgiven" instead of settling through legal proceedings
  7. Faster with less paperwork and red tape

OK, so there’s a bunch of good reasons that the first step anyone who is interested in keeping their home should do a Loan Modification. 
But are there any pitfalls?
Like anything, the answer is yes of course. 
The first one is that most loan modification companies require a fee upfront. And I say most because there may be a company that doesn’t require a fee upfront but I haven’t found them yet.
The next one is that even the best companies that I have interviewed don’t offer any guarantees of success or favorable terms.  Mostly because as I mentioned earlier, there are in fact many variables involved.  For example, what are the specific bank requirements, what is your total financial picture, and what is the value of the property?
This is why it is critically important to make sure you are with the right company. 

What could happen if you end up with a company that is untrained, unqualified, or are just downright unscrupulous?  You could end up spending your money to be strung along for months at a time drawing you closer and closer to the foreclosure sale.  By the time you finally figure out that they cannot get the job done it may be too late.  Even if you hire another company to step in, you’ve still lost your money and even the new company may not have enough time to straighten things out or do a short sale.  You have one chance to get it right.  You can’t test the waters.  It’s too dangerous.

I’ve spent my time meeting with and interviewing with quite a few loan modification services and I think I have found the right ones that
can get the job done
have the knowledge and experience
are committed to helping people not just themselves.

So, if you’d like to connect with the right company, either fill in the form or call me directly to discuss your situation.  I’d be happy to do it.

A bit about mercenaries, swords and how we handle our money:
Did you know that when the crusades were being fought in the 12th century, the crusaders purchased the services of mercenaries to fight in their behalf?
Because it was a "religious" war, the crusaders insisted that the mercenaries be baptized before fighting.  As they were being baptized, the mercenaries would take their swords and hold them out of the water to symbolize that Jesus Christ was not in control of their swords.  They had the freedom to use their swords in any way they wished.
Today many people handle their money in a similar fashion, though they may not be as blatant about it as the mercenaries were.  Some Christians hold their wallet or purse "out of the water, " in effect saying, "God, you may be the lord of my entire life except in the area of money – I am perfectly capable of handling that myself."
The lord talked so much about money because He knew that much of our lives would revolve around the use of money.  During your normal week, how much time do you spend earning money in your job, making decisions on how to spend money, thinking about where to save and invest money, or praying about your giving?  We spend a significant portion of time centered around the use of money.  Fortunately, God has prepared us adequately for that task by giving us the Bible as His blueprint for living.
If you’d like to learn more about that blueprint, please don’t hesitate to ask me when we chat.