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Profile picture for ktincolevalley

What are the pros/cons of "loan modification". Impac is offering to modify my loan rate to 4%.

The service provider of my loan is Countrywide. Impac is the investor and, apparently, owns my loan. I've never dealt with them. Recently, though, they contacted me to offer to modify my loan. I have a 7 year ARM, interest only (jumbo loan) @ 6.25%. They said they are being proactive with good customers. I am current on my loan and my credit is excellent. If approved, they said they can get my loan down to a 4% interest for 5 years. There is a fee of ~ $2,000 - payable only if my loan modification is approved. If my interest rate goes down to 4%, this fee would pay for itself in 1 month.

Is this possible? What are the pros/cons? Will this affect my credit rating?

I don't want to turn away a great offer, but I also don't want to be naive. Help!


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February 20 2009 - Castro-Upper Market
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Answers (36)

Profile picture for DSCraig
http://www.zillow.com/blog/arizona-sb1291-passes/2007/07/05/, zillow's own Lloyd Frink, wrote "We believe consumers have rights to open and transparent real estate information, for free. We believe attempts to limit or restrict access to this information are not in the best interest of consumers anywhere."

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September 20 2010
This is one of the most common questions I get. "Does a loan modification affect my credit?"  The answer is no.

If you were behind on your payments, that would be another story as far as lates being reported to the credit reporting companies.

Your other questions seems to be whether you should take the offer or not.  The answer there depends on what your goals are, but given you will be getting out of an ARM and it will pay for itself in one payment, this appears to be a good deal and smart financially, regardless of the extra payment, because you now have the ability to pay more principle if you choose.

Hope that helps. Goodluck!
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September 17 2010
Profile picture for the_country_hick
Now a year and a half later did you ever do the loan modification or was this offer a scam?
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September 14 2010
Profile picture for DSCraig

I'm glad that Zillow is providing this service.  Exposes happen for a reason.  Reasons like bad customer service or injustice.   As the realization sinks in that in internet is a real time conduit of ones reputations, customer service will only be forced to get better.

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September 14 2010
Applying for this loan modification seems like a no-brainer to me. If you qualify it will only cost you $2,000 in fees. I would check the fine print about your loan terms, though. Is the 5 years fixed at 4% interest only or principle and interest. What does your rate adjust to after 5 years? Is there a pre-payment penalty?
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September 14 2010
Profile picture for JustJoeAverage
FACT:  Our Impac Mortgage loan modification documents came from Bank of America on Bank of America paperwork but it was Bank of America who had just written us from their CEO's office nothing they can do for us.

FACT:  According to several State of Nevada websites, Impac Mortgage is not liscensed to do business in Nevada which is where we live.  Yet, according to several State of Nevada web sites, Impac Mortgage is REQUIRED to have several liscenses from several State of Nevada agencies in order to do legal business here.

FACT:  Impac Mortgage is not liscensed in Reno, nor Sparks, Nevada nor Washoe County Nevada although Impac Mortgage is required to be to do business here by the Citys of Reno and Sparks and Washoe County.
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August 26 2010
Profile picture for JustJoeAverage
FACT:  In Nevada all these loan mods have to be approved by the Nevada Mortgage Lending Division.  We found this requirement out only after the fact.  The Nevada Mortgage Lending Division never approved our Impac Mortgage approval from Jason Curry and Steve Curry because Impac Mortgage, Jason Curry and Steve Curry are NOT registered as they are legally required to be.

FACT:  Nevada Assemly Bill 149 FURTHER Requires Homeloan Modifications

Nevada legislators finally got fed up enough with the lenders illegal foreclosures and did something. 

FACT:  Bank of America (and their appearant partner Impac Mortgage) never complied with NV AB 149.  They just slapped an illegal Notice of Default on our home and there it illegally remains to this day.

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August 26 2010
Profile picture for lnshrk

What you speak of is ONLY applicable to government backed loans. Impac owns the loan, making it - NON- government. There is NO federal or state law mandating that a non-government backed lender or investor must modify their loans, let alone modify for free.

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August 26 2010
Profile picture for Rock Martin
I'm probably missing your point inshrk because it's not valid here in the issue I'm talking about.  Don't pay for something you get on your own for FREE directly from any lender in compliance with the numerous laws or from a HUD-certified housing counselor reminding your lender of their duties under the law to you the borrower.
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August 26 2010
Profile picture for lnshrk
Rock,
You are missing the enitire issue here buckaroo.

This is NOT an upfront fee. It's a fee charged ONLY if they approve it.  Everything you have cut-and-pasted here is irrelevant. At least - read the question carefully!
"There is a fee of ~ $2,000 - payable only if my loan modificationis approved"
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August 26 2010
Profile picture for Rock Martin
Simon, you asked "What do you have to lose?"  Simon, you, if you are a home borrower and you are scammed here out of cash out of your pocket, you lose your cash, a lot of your cash, you legally are NOT required  to pay/lose.  I don't like losing cash.  Do you like losing cash you don't have to Simon?

Simon, you're a Realtor I see so I refer you back to your NAR Code of Ethics Article 11.


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August 26 2010
Profile picture for Rock Martin

FTC, State Enforcers Sue Scammers, Warn Others; Announce Education Campaign Designed to Reach Borrowers Directly

The Federal Trade Commission announced a crackdown on fraud and deception by mortgage modification and home foreclosure rescue companies. The FTC seeks to halt the proliferation of these mortgage relief scams – which target distressed and vulnerable consumers who are delinquent or facing foreclosure – through increased law enforcement, consumer outreach, and close coordination with federal, state, and non-profit partners.

At a joint press conferenc, Treasury Secretary Timothy Geithner, Attorney General Eric Holder, Department of Housing and Urban Development Secretary Shaun Donovan, and, on behalf of state enforcers, Illinois Attorney General Lisa Madigan, joined FTC Chairman Jon Leibowitz in warning consumers about these types of scams and in encouraging consumers to seek out FREE, HUD-approved housing counselors for help with their mortgages. The FTC and Attorney General Madigan also announced enforcement actions and initiatives.

"Scammers are taking advantage of people in a difficult situation – people who are trying to modify their home mortgages or those who are trying to avoid foreclosure. We're enforcing the law against these scam artists; we're putting others on notice that unless they change their ways, they're next; and we're working with other government agencies, non-profits, and mortgage companies to reach out to our neighbors in distress with the details of how to get help," said Chairman Leibowitz.

The FTC announced five law enforcement actions against operations using deceptive tactics to market their mortgage modification and home foreclosure relief services, including firms that marketed their "services" by giving the false impression they were affiliated with the federal government. This brings to 11 the number of loan modification and mortgage foreclosure rescue scams brought by the FTC in the last year. More than 20 state law enforcers also have taken actions against companies engaged in these types of deception, including 22 brought by Illinois Attorney General Madigan.

The FTC also announced that it has sent warning letters to 71 companies who are deceptively marketing mortgage loan modification or foreclosure rescue services with fee requests or requirements. The FTC identified these companies through a nationwide review of Internet and other advertisements and warned these companies that their ads violate federal law. State law enforcers also have sent warning letters to companies that are engaging in such illegal practices as fees from the borrower, including more than 60 warning letters sent by Attorney General Madigan.

Finally, the FTC joined forces with a wide array of government, non-profit and mortgage industry members to launch a new consumer education campaign to help those in financial trouble avoid becoming the victims of a loan modification or foreclosure rescue scam.

FTC's Law Enforcement Actions

The FTC announces five law enforcement actions targeting perpetrators of mortgage-related scams. According to the FTC, these schemes typically operate in the following way. First, they use terms like "guarantee" and "97% success rate" to mislead consumers about the mortgage modification or foreclosure relief services they can provide; they illegally charge up-front fees for these "services" – ; and they use copycat names or look-alike Web sites to appear to be a nonprofit or government entity. Often, after collecting the illegal fee, these companies do little or nothing to help consumers. In each case described the FTC is seeking, or already obtained, a temporary restraining order to halt the defendants' illegal conduct.

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August 26 2010
What do you have to lose?  If you are current and your credit is excellent assuming your income is good then the major stumbling block is going to be your LTV.  If it gets approved then the fee is worth paying.  Just be clear that the fee is only paid upon the successful modification and that there is no negative effect on your credit.

Simon Mills
Mills Realty
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August 26 2010
Profile picture for Rock Martin
I see that others here are also quite aware of the facts, that "Impac Mortgage, Impac Companies, Jason Curry and Steve Curry are clearly openly based out of California and clearly and openly doing business everywhere.   Under California's Mortgage Foreclosure Act as codified in Sections 2945 et seq of the California Civil Code, a regulation, all foreclosure specialist or consultants, which all loan modifiers are, which Impac Mortgage, Impac Companies, Steve Curry and Jason Curry are, are all PROHIBITED from requiring or collecting Impac's illegal "required upfront fee.""
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August 26 2010
Profile picture for Rock Martin
Inshrik,  sorry to burst your bubble there champ, but it is illegal at the federal level as well as all 50 states.  Has been for a awhile.
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August 26 2010
Profile picture for lnshrk
Rock,

You should know what you are talking about before you dole out legal advice. You are incorrect in your answer. The investor is charging and it IS legal since the customer pays only IF the modification is approved.
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August 26 2010
Profile picture for Rock Martin
You do not need Impac.  You do not need any loan modification company.  It is illegal for anyone to ask or require any fee, upfront or not, from any home borrower seeking foreclosure or upside-down relief. 

Look, the Obama administration announced a U.S. multi-agency effort to combat these loan modification scams, which government officials and a lot of worried home borrowers said, and say, are unlawfully and cruelly preying on distressed home borrowers who are only desperately searching for help in this severe economic downtown.

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August 26 2010
First read the guidelines. Click here.
Second calculate your DTI using the maximum payments you shall have paid when your ARM reaches its CAP rate.
Are your payments more or less than 55% of your gross monthly income? NO, responsibly make your payments until your loan is paid off.
YES, DO NOT MODIFY your loan. Find a Lawyer who gets it make an appointment and take it from there. Seek a refund not refi.
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October 21 2009
Profile picture for Modification Secrets
Sounds like a good deal.  It should not affect your credit unless they put you on a forbearance first and then convert it to modification later.  Ask them about this before moving forward.
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July 14 2009
TAKE IT!
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July 14 2009
Profile picture for lnshrk
There is absolutely NO need for an attorney when you are working directly with an investor who owns the loan.  The person below saying that you should only use an attorney... sells prepaid legal services. 
When is the last time an attorney has done anything for free?  The attorneys or "Mod Companies" cannot negotiate ANYTHING different than the customer can directly with the investor, they are trying to profit. 

Some lenders and investors DO charge to modify their own loans and this is because they are not receiving taxpayer funds for compensation.
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July 08 2009
I have seen clients get loan modifications for free. 
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June 21 2009
[Deleted for self promotion]
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June 21 2009
Profile picture for Modification Secrets
 The pros to a loan modification would be that it will lower your mortgage payments, without going through the expense of refinancing.  Many times you can achieve the same results as if you had refinanced but without the costs. Another big pro is that the qualification guidelines are completely different than that of a refinance.  If for some reason you can't qualify for a refinance, this is a great option.  For a modification, your credit and the equity in your home are generally not a factor in the approval process.

The Cons to loan modification include not having choices of loan programs that you would if you were refinancing. Another words, the bank is going to decide what program is best for you.

The second Con, and it's a major one, is that it can temporarily damage your credit in the short term.    During the process of going into the modification, the lender might be required to put you on a forbearance agreement for a short period of time.  This actually is the part that can cause late payments to show up on your report.  The reason for this is because your payments are not consistent with your original note and thus the lender has the right to report you late despite the fact that you are following their instructions.  Anyway, once the forbearance is converted into an actual modification, you will receive a new note and the payments will now reflect on time.  After it is completed, simply present your forbearance documents to three credit bureaus to have your report fixed and the late payments removed. So if credit is not a concern in the short term, this can be a great option

If you decide the route of a loan modification, I have written a Do-It-Yourself Guide.  It will show you how to prepare and what to do and say for a successful result.  If you Click On My Profile you can see how to get the guide.
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June 20 2009
I would go for it. Just be glad you have been a good borrower and are now being rewarded.
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June 19 2009
Profile picture for lnshrk
If you are being contacted by Impac it is legitimate, Impac does modify their loans and they are a publically traded company.  They own approximately $18,000,000,000 in loans per their SEC filings. I know of a couple of people who have paid the fee and were modified within 24 hours. I would definitely pay 2k to get my mortgage company to modify my loan and save hundreds each month. It's a no-brainer!

Some lenders DO charge to modify their own loans and this is because they are not receiving taxpayer funds for compensation.
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June 18 2009
No lender charges a fee for a modification, attorneys and modification companies do. If a company suggests a new rate for you, its bogus. A modification is a negotiation. Its impossible to set a rate unless you are the bank. Its common sense. Do not fall victim to companies promissing rates or charge offs-its unrealistic. Take care
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June 17 2009
Profile picture for stevencurry
This is a real offer, please call Impac if you were contacted.  Impac is the investor on many loans that Countrywide, GMAC, Wells Fargo, etc... service.  Impac has several options to help out, so if your in need please call Impac.

Steven Curry
Senior Vice President
Impac Lending Group.
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March 02 2009
I think were going to see a lot of mass mailers like this going out. 

FOR SALE!! BEST OFFER!!

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February 20 2009
Profile picture for Clearpoint
I think were going to see a lot of mass mailers like this going out. 
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February 20 2009
Related Questions
What are the pros/cons of "loan modification". Impac is offering to modify my loan rate to 4%.
Profile picture for DSCraig
Latest answer by DSCraig
September 20 2010 | 36 answers
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