With the current economic conditions, it’s no wonder we have seen an increase in many types of scams and ‘too good to be true’ offers. Unfortunately, we live in a world where sociopathic behavior is fairly commonplace, and even rewarded! For some strange reason, tough economic times brings out the worst in some people. Today brings a new breed of scammers to the forefront, and this is a group of people that will be growing in numbers for many weeks and months to come. I speak of “Mortgage Modification Experts”, or whatever fancy term they come up with for their unnecessary business. You know them well- just a year ago they were selling houses, selling mortgages, or selling electronics at Best Buy. Now, all of a sudden, they want to ‘give back’ and help distressed homeowners. Pardon me if I sound cynical, but I think it’s more likely they just need to make a little extra money at any cost.
Some of these people mean well, some are downright thieves. The thieves business model is simple- approach fearful homeowners with promises that their money woes can be fixed- and only THEY (the modification people) can help them! They ask for a nominal up front fee (I have seen fees ranging from $495 to $3000!) and in return promise NOTHING. (that’s right- they make no promises of success!!!) They lead the homeowner to believe that they will work diligently on their behalf to get their mortgage loan ‘modified’, and even make claims such as ‘we can help you keep your home and get you a 2% interest rate!’. The problem is, they do NOTHING, and simply take that money and RUN. The homeowner goes into foreclosure, and now they are out even more money in the process.
Consumers will see ads, hear commercials and be approached by family members who have heard of such ‘teams of professionals’. Don’t be fooled!
Here’s a list of what ANY consumer can do to modify their own mortgage, free of charge!
1) Contact the loss mitigation department or loan modification department of your current lender. You may feel uncomfortable calling them and explaining your situation- but believe me- they want to hear from you.
2) Fill out the ‘loan modification documents’ they require. Wow, that was fast.
It really is that simple. Why? Because if you fit certain criteria, the bank will work with you to help you keep your home- no “help” required. That’s what the new legislation is all about! Typically you need to have one or more of the puzzle pieces to qualify for loan modification:
1) You owe more than the house is worth
2) You have lost your job and can no longer afford the full payments
3) You have an ‘Option ARM’ from a lender like Countrywide or Washington Mutual
4) You have missed two or more payments
What a Loan Modification means for you:
1) They ‘write-down’ the balance of your loan to a percentage of the home’s CURRENT VALUE. That’s right. If you live in an area that has seen dramatic losses, the lender may forgive a portion of your loan balance.
2) A lower interest rate. This is huge- especially for people who are stuck in Adjustable rate mortages like ‘Pay-Option ARM’s’. If you are at 9%, expect a large rate decrease!
If a lender is going to modify your loan, YOU have the power to inquire about it. You do NOT need the help of any ‘team of professionals’, and anyone who tells you that you DO need them is lying. You either qualify or you don’t! No company can negotiate to “make” you qualify- but they can steal your money by telling you so. So keep that in mind.
I cannot stress this enough- do NOT give anyone money up front for loan modification services. Remember that there are always shady characters looking to take advantage of people’s fears. Do not fall victim to the latest too good to be true scheme/scam/waste of money.
If you approach your lender and they are willing to work with you, have an attorney review the documents if you don’t understand them. Be sure to check for what happens when you SELL the home, and other such contractual obligations you may have under the new terms.
The bottom line is simple- banks want you to stay in your home. They see the writing on the wall too- housing prices are continuing to fall, and a foreclosure auction will do them no good! They want your interest payments, that is all they care about. And with the new bailout, they don’t really mind ‘losing money’.
Don’t let your worries and fears hold you back- you can do this! And you don’t need the help of a fly-by-night industry to do it!
For free information, feel free to contact ANY lender on the Zillow Mortgage Discussion Boards.
Jennifer Monastero
Citizens Community Bank
Last 5 posts in Loan Modification
- Bank Accidentally Sells House as Foreclosure - November 11th, 2009
- Loan modifications are lowering monthly payments - October 4th, 2009
- More Homeowners are Late on Their Mortgages - September 21st, 2009
- Successful Short Sales…I mean plural…more than one! - September 14th, 2009
- FHA Mortgages Now Qualify For Government Help - September 3rd, 2009
- Stumble it!
- Categories: Loan Modification
Comments
38 Comments so far
Patricia Navadomskis
This was very helpful and informitive. In Chicago YOU CAN NOT BE TOO CAREFUL. We have so many sociopaths in real estate.
You call the banks, they do not listen they give you the run around.
Lot’s of sociopaths there too. I can not believe how little they PAY ATTENTION TO WHO THEY HIRE. And talk about incompetant and NOT PAYING ATTENTION.Lawyers they do not pay attention either.
Big big mess maybe some bank will have a competant help.
Patricia Navadomskis
you know the banks KNOW that they have had problems.
So how do they Rate Mobbing ,sabatouge political protest.
The computer clicks off high intrest rates and you can not get things fixed your article was more informative than any of the banks i went into several times and my own bank is not very well informed.
Do you know what kind of lawyer ???????
no one seems to know that either??????
Ronnie Glomb
Your take on the process is interesting. The bank has their best interest in hand. The same with why the home owner doesnt present thier own short sale packages. The same why they list with a realtor. They Cannot promise anything because they are nogotiating!!!! The same as you wont promise a price that you can sell a house.
Please dont be bitter! These people need help!
Jennifer Monastero
Patricia- if you or anyone you know need more information, go to http://www.hud.gov or contact your state/local housing authority office. They would be able to put you on the right track.
Ronnie- Bitter? The only bitter people are the ones who have gotten ripped off by scammers that have no business offering advice or services for a FEE. If they want to give people bad information, the least they could do is NOT charge for it. You know this is true- people in this new ‘industry’ are all too willing to take someone’s money knowing full well that the homeowners do not qualify for a loan modification. Sick!
Cynthia
I work for a mortgage broker who also services hard money loans. I handle the loan servicing in the office. My boss has had to lease most of our office space to a loan modification company just to survive. I do not work for the modication company but I do observe how much work goes into the loan modifications and how much time is spent on each one. What I see is the banks and loan servicing companies making the process difficult and time consuming they lose paperwork or they take so much time assigning a loan counselor that the paperwork has to be updated new check stubs, bank statements etc. which involves contacting the borrower for more documents then sending it to the lender and hoping they care enough to get it in the file and start working on it. The modification company has increased there staff that was 4 in the beginning to 9 and they are currently hiring more staff. They do all the work for the bank lay it all out in black and white why it would benefit the bank to modify the loan because the banks obviously can’t after atleast a year of this mess figure out a system that doesn’t require the borrowers to HIRE someone to help them through the process. I think the banks should pay the fee for modification in all actuality it is there job the modification companies are doing and they are the ones who make the process so frustating that borrowers can’t do it on their own. A borrower would have to take so much time off of work just for the phone calls and hours on hold during working hours that it alone would create a hardship. It also seems that if the banks don’t have it all spelled out for them on what is a decent modification for all involved they try to offer the borrower some ridiculous modification that would not solve the problem and not worth the time already spent. I think Jennifer is part of the problem she either doesnt have a clue what is really going on and talking out of her a** $3500.00 is alot of money and it is because of the banks that it costs that much why dont you try to fix that problem and put all of so called scammers out of business the company in my office has a 87% success rate sad thing is it takes 2 to 3 months to get one done why should that company not get paid for their time and expenses. I am not self promoting anything just giving my opinion from observations I have made during this mess. I started working for a morgage broker in April 2005 no previous experience in the industry and I am not a loan officer I have never made commission but I have seen what greed has done to our nation. The banks would come into our office offering exotic loan programs bringing gifts and wanting our business. It was never ending how many different lenders would come in competing with each other I think alot people made alot of money and I worked for the bottom guy who made alot of money but without the lenders, wall street brokers, insurance brokers and credit rating agencies shoving it in their face all laid out on how to get loans done for everyone. One more thing I live in the so called Foreclosure Capital of America Stockton, California.
Brian Brady
Jennifer:
Who is better suited to serve these strapped homeowners?
Jennifer Monastero
Cynthia- good information. You bring up some excellent points. Still, I fear that many in the industry are just taking people’s money and walking away. Exceptions to every rule.
PS- How much does the company charge? what happens when they can’t get the modification? Is there any protection for the consumer?
Jennifer Monastero
Brian- you know who should do it? The loan officers that got them into the loans, if they are still in the business. They should do it for free, or as close to free as they can. I have yet to hear a good reason why an attorney needs to get involved.
Cynthia
The company charges 750.00 to 950.00 upfront and 2900.00 to 3900.00 upon signed modification. They only take the modification if it looks like it would work and they pretty much know what the basic guidelines underwater in value and hardship with ability to make a lower payment. If the home is in default they take nothing upfront and charge around $5000.00 I think, but the nods create more work and have to be followed up on a daily basis. One of the modification that came through on friday not sure of details but the borrowers payment went from $2600.00 to $1100.00 for the next 5 years so it was definitely worth it to the borrower. Most of the expense is because of the time tracking files sent to the lenders that take FOREVER assigning someone to the file and have a problem with misplacing documents sometimes 2 or 3 times the same stuff has to be sent. The lenders need to get with the program, it is affecting our whole economy and causing more and more bail outs that will in the end cost taxpayers.
Brian Brady
“The loan officers that got them into the loans, if they are still in the business. They should do it for free, or as close to free as they can.”
Should originators be responsible for borrowers’ performance? Should they offer free “bailouts” for any loan they’ve ever written?
Jennifer Monastero
Cynthia- how do the borrowers pay those fees? Is it something that comes out of their equity somehow? And you are right, lenders do need to properly staff their loss mitigation and loan modification departments- that would go a long way toward helping the current situation.
There are a lot of new ‘businesses’ out there that do prey on people in bad situations- even people in situations where they KNOW they will not qualify for a modification. It’s great that the up front fees at the company you speak of are so reasonable- it does sound like a beneficial situation for those involved.
Brian- No. Your questions are hardly even entertaining. Try harder.
Cynthia
Here are a couple more observations I have made during the crisis. The mortgage brokers that came into our office did not warm up to the idea of loan modification as a way to pay their bills right away I think after seeing client after client in their office that they could not help because of equity or lack of lending by the banks and probably trying to help a few long time clients or real heartbreak situations with modification for free and finding out how much work goes into getting the bank to come to the table for the best interest of all involved they started thinking about charging so they can feed their families. I don’t think they look at it like a get rich quick thing it is a frustating time consuming process with real people and emotions of losing their home involved these guys are face to face with these people they are hardly scam artists or opportunist. I think as far as being scammed it is the responsibility of the consumer to check out a business they are not familiar with or they have not been referred to by someone they know. It just puts a bad name on mortgage modification to say there are alot scammers out there doing this there are alot scammers out there period not just in this industry. Saying that is only making people who could possibly stay in their home by getting help fearful of even trying or thinking all mortgage modification is a scam. Here is another thing the banks/lenders need to look at I have a friend who worked at a title company and of course was laid off and lost her house after the trustees sale a realtor came to her door and offered her $4000.00 to be out in 2 weeks $2000.00 if she was out in 30 days. Wouldn’t it be saving money if the banks/lenders would get with the program and not bad mouth the companies that are trying to help them. They could pay that cash for keys money for a loan modification it would help with the inventory on the market. Why do the banks have their heads up their b*** and not see what is really going on while they are on the verge of failure.
Brian Brady
“Brian- No. Your questions are hardly even entertaining. Try harder.”
I’ll reword it. Am I to understand from your answer that you believe an originator has no responsibility to the borrower post closing?
I think you opened a Pandora’s Box when you suggest that independent entrepreneurs are “scam artists” for trying to help strapped homeowners and charging as they see fit.
“As for how many of my loans have gone into foreclosure- none, that I know of. It would be impossible for me to know for sure without checking each and every loan I have ever done.”
This statement suggests that you don’t, as a business practice, stay in contact with your borrowers. Mortgage brokers often do that because it helps us monitor the borrowers’ performance (and, selfishly, alert us to changes in financial position that may require another loan solution).
I’m confused. If you (and by you I mean lenders’ representatives, collectively) won’t stay in contact with your borrowers, why would you criticize the independent entrepreneur who seeks to clean up the mess that results from the lenders’ representatives’ practices?
I suspect you are well meaning in your intention to warn consumers against “sharks” but frankly, if you’re not part of the solution…
…well, you know the rest.
Jennifer Monastero
Brian- ‘keeping in touch with borrowers’ means sending out Christmas cards or gift baskets. If you REALLY think you could tell the payment history on every single mortgage you ever wrote, you would be just a tad misleading, or an extremely nosy originator. ‘Hey Sally, how are you and Bob doing? Need a refi? No? Well, are you up on our payments???’. Doesn’t happen, and you know it.
Also, I didn’t say they ALL were scam artists. It just so happens that in times where there is a lot of FEAR, people get taken advantage of. Nothing new there. It will always be that way. Now, if you could honestly say that someone should automatically pay someone thousands of dollars to do something they could do themselves, fine. We’ll just disagree on that point.
Who knows, I could very well start doing loan modification in the future- I trust ME. I do not trust some ex-loan officer who thinks the next big ticket will be preying on people who are hurting and scared. What don’t you and Dan understand about that???
Brian Brady
“If you REALLY think you could tell the payment history on every single mortgage you ever wrote, you would be just a tad misleading, or an extremely nosy originator. ‘Hey Sally, how are you and Bob doing? Need a refi? No? Well, are you up on our payments???’. Doesn’t happen, and you know it.”
Here are two resources for you, Jennifer:
http://www.loantoolbox.com/actioncenter/jsp/login/flex.jsp?p=pyramid4
http://cmpsinstitute.org/professional
Cynthia
Jennifer
I dont know how the borrower comes up with the fees. If it was me I would have to borrow the money or put it on a credit card, sadly I don’t have $750 sitting in an account. I think if they look at what a good modification will save them over the life of the loan it would be a smart investment. When I got to work today I found out the modification company got their first principal reduction $80,000.00 for a client. There are so many people that need help I disagree with you on the statement why would they pay for something they could do on their own very few if any lenders make it easy for a borrower to get a decent modification that makes a difference in their situation. I also noticed that the lenders are charging money for the modifications also because I am sure there are expenses they have to cover they just add it on to the loan. The only way the borrowers will be able to do this on their own is if the banks/lenders get their act together and put together a program that is fair and easy to access. Im sure they will charge for it just like the modification companies.
Jennifer Monastero
Cynthia- I’m curious to know what you think these companies do that is so special. Lenders are getting their acts together, and some, including Countrywide and Washington Mutual, are becoming proactive in their attempts to re-write these loans. It is getting easier and easier, in some cases. So, we’re heading in the right direction.
“why dont you try to fix that problem and put all of so called scammers out of business the company in my office has a 87% success rate”- an 87% success rate, yet “When I got to work today I found out the modification company got their first principal reduction $80,000.00 for a client.” This is confusing- how could they have a high success rate when they just got done with their first modification? Or did I misunderstand you?
Dan- ?
john
this economy was caused by the fed raising the interest rate 1 point a week for 5 weeks they knew this would happen and homowners on variable rate loan would forfit thier houses.
all societies change as a pendulum swings, we already went from republic to democracy, next is socialism, comunism/marxism, then dictatorship- it is enevitable –look at ALL world history- roman, greak, german, russian, etc
john
Trading propertys and owner finance should be the norm in this country to avoid banks and government from controling everything-this would avoid all this crazy financial stuff you guys are arguing about!!
i owned over 40 houses and most were finance by owner and when i sell i provide owner financing.
Jennifer Monastero
John- actually, most of the loans you speak of are not in any way tied to the Prime rate. The only loans tied to Prime are lines of credit, everything else is based on an index- MTA, LIBOR, COFI etc. No relation to what the fed did, although when Greenspan went trigger-happy LOWERING rates, we did see massive amounts of new lending. Somewhat related, but not as intertwined as you would suggest.
Jennifer Monastero
Oh- and that is a GREAT idea. Obviously, it would hurt my industry
BUT, a significant portion of homes in this country are owned outright- those owners can certainly consider owner financing, instead of worrying about these financial disasters we have created.
john
yes but when the greenspan replacement raised rates caused this whole problem- it was all planned, it is enevitable. socialism is right around the corner- if we have another 911 we will go directly to a police state, then dictatorship, then no private owned property. so no worry’s
john
there are other aspects for sure- like with rates up lending slows and if you increase requirements, like no more no document loans you remove a lot of buyers that would have continued to buy property–a lot of people have income or some cash flow but do not want to go thru the “divulge everything” process that banks want to see so they can resell thier loans
john
credit reporting is terrible also they have a part in all this–they made 4 doctor bills totaling $3500 into 13 pages of derogatory info
Cynthia
Jennifer
You are right WaMu and Countrywide do seem to have a better system for the modifications I think some of the horror stories coming from borrowers who tried to modify on their own are from those 2 lenders. Countrywide was just plain rude and told my sisters co worker just because her payment almost doubled from $2200 to $3600 and she was underwater over $100,000.00 they needed to quit eating out. Both companies would offer modifications that would drop the payment less than $100 a month charge them for doing the modification what is the point? It may be because both banks have so many bad loans that is why they stand out more than others in both examples it could be because they both failed and had to be taken over by another bank, but they both do seem to be getting better at giving modifications that will keep borrower in the home without reducing principal isn’t that what the goal is? The 87% percent success rate is with signed modifications that achieved a payment the borrower could afford and allow them to stay in the home. I dont know if the company asks for a principal reduction on all the intial proposals to the bank but I do know that Monday was the first time they got one that included principal reduction along with rate reduction. So the percentage is not 87% for that type but it is included in the total of sucessful modifications. I know that they are getting extremely busy alot more files coming in and it probably has something to with word of mouth from friends, family and co workers and they must have paid a company because if they were able to do it on their own I think the company in my office would be laying off instead of hiring, which I am sure will happen if the banks REALLY get with the program they need to look at what will make sense and is in the best interest of the borrower. The banks have done some real shady crooked things with borrowers on these modifications it is unbelievable what they have tried to get away with when borrowers went to them on their own so until that kind stuff stops and these borrowers get treated like human beings by the banks there will be a need for independent modification companies that charge for their services. Jennifer you work for a bank and what I am relating to you is just what I see on a daily basis first hand. I have only been involved in this industry since 2005 and what I have witnessed is unbelievable all the way around. There is alot about the industry I do not understand and I am looking at this situation as person who has never owned a home. I do not think the borrowers are innocent on all of this either and personally from my own point of view although I dont say this in my office I wonder why these borrowers would want to keep these huge loans the prices in my town I would say are 50% lower than 2 years ago so even when the market comes back how long will it take to reach that level if even at all and after years of making payments they are still underwater. I know that it is the best thing is to keep them in the homes for our economy the inventory on the market is staggering. These loans were approved by the lenders underwriter and these programs were created by the banks who sent out reps to sell them to the mortgage brokers to get more loans. I mean I saw some dog and pony shows by the sales representives of the lenders. The money they spent on promotional items had to be huge, pens that lighted up and flashed in 3 different colors, tickets to sporting events it was unbelievable to me at the time. I dont know how a bank operates and who makes policy but they need look at this whole thing and their role in it and start really doing something that makes a difference instead of taking bail out money that taxpayers will eventually have to pay for and quit paying commissions to stock brokers, insurance brokers, credit rating agencies, mortgage brokers and especially themselves personally. What a sick little system someone created.
john
are creating
Jennifer Monastero
For future reference, this is exactly what I am referring to: http://www.latimes.com/business/la-fi-scam5-2008nov05,0,7629587.story
Just read the story, and then get angry. Keep in mind, this is just the start of trouble.
Seth Goodwin
Loan Modifications are a bad idea for people who plan on staying in their homes for the long term. What equity is gained from that point forward is a 50/50 split. Moreover, I only truly feel bad for the people that actually need it. The loan modification limites are going to be set to 544K !!!???!!!
People will be taking advantage of this as there are no true clear cut rules to it. Tell me, who has a mortgage that large and can honestly say their distressed?????? To add to this, why were people taking ARM’s and obtaining loans they truly could not afford or research for that matter? Option Arm Example: If I went to a Mercedes dealerships and was told I could finance a 125k car for $400 a month the light would turn on in my head… But I forgot, it’s not the consumers fault for having faulty wiring in their head lol. I say this because I never once issued a sub-prime loan. I’m actually the only person I know of in the industry that would tell a borrower to find another channel for obtaining anything of the sort (including negative amortization loans)! Loan Modifications are going to kill our economy in ways that people can not even imagine! You think it’s bad now? Wait until all the investment firms that bought these junk securites go under. They own them, not the banks. Banks service for the most part. Hence the reason Fannie and Freddie exist. They own the conforming loans and the banks service them. As is inter bank lending is peaking to all time highs. Things are hard enough for small businesses. Nevermind the fact that no one in our Gov’t knows anything about finance for the most part. If anyone could really tell me what good giving away free money to irresponsible home owners (that’s the majority of the people doing this are, not all) and bankrupting the investment bank system will do my ears are open. Then again, no one can present an arguement that actually makes sense. Think about it this way. Investment banks carry a load exceeding that of Fannie Mae and Freddie Mac. As a result, investment firms do not even want to buy securities for the clenaest A Paper out there. As a result Yield Spreads on the securities are ridiculous right now. In all reality, if loan modifications were not going on right now interest rates would be 1 point cheaper to the consumer. All in all, the cleanest paper out there is also taking a whipping because of this mess…. And politicians are going to put the icing on the cake so they can get votes next time around. They don’t care about the real backbone of the economy because they always have the option of pointing the finger at someone else. If anything, this is a ploy designed to create a consumer confidence spark within the average citizen. That’s what it all comes down to as the US has transformed from an industrial society to a service based society. Yet we will save the big 3 autmakers too??? Only people that really need modifications should be able to obtain them in the most dire of circumstances and hardships. The process should be based on strict criteria. If you deserve to be foreclosed upon there should be nothing that can happen to stop it. People lacking the responsibility to own a home should not. This foreclosure wave started well before the economy started to slow down. It’s all a sham in my eyes.
Paul J. Molinaro, Esq.
In California, the DRE website lists the companies that have DRE “permission” to modify loans… add to this list any California attorney, and that is where you should seek help (in California). My law firm has been getting more and more calls recently from homeowners that were victims of predatory lenders and now fell into the hands of those same people who sold the toxic loans but profess to be saviors… don’t be a victim twice… do your homework and THOROUGHLY investigate any comany law firm or otherwise before hiring them to save your biggest asset and your home. And, yes, my firm does take cases against loan modification comanies who have violated laws. These scammers are popping up everywhere on the Internet, billboards, and media advertisements everywhere. Make no mistake, in many cases, these are the exact same loan officers and mortgage brokers who fleeced homeowners the first time… they have now found a new way to make huge profits. Of coure, this is one lawyer’s biased opinion, but one based on many distressing calls to my office every day
karin wedemeyer
Karin
Jennifer,
I am talking to a modification company called “Better Home Relief”, based in California. How do I know if they are sc ammers or not?
Jennifer Monastero
Karin- unfortunately there is no way to tell if they are scammers because it is such an unregulated industry. Since you can do your own loan modification for free, you have to determine what the actual SERVICE is worth to you. In other words, some people mow their own lawns, some people pay someone else good money to do so- it comes down to what you have time for, and what it is worth to you to have someone else deal with it. Aside from that, there are many places to get free help and info -start here: http://www.hud.gov/offices/hsg/sfh/hcc/hccprof14.cfm
Ney
For any attorney to state something like “It is imperative that your loan modification is done by a law firm,” is an overstatement to say the least.
There loan modification market is “HOT” just as the housing market was hot a few years back. What happened back then? Many opportunistics came into the industry, took advantage of as many people as they could and then ran.
What is happening now? There are just as many opportunistic people (most of the times are the same “subprime wolves” from the good old days) as there was before. But now they are feeding on the fears of homeowners who are loosing their homes.
Additionally, there are brokers who are “affiliate” with attorneys in order to defraud more people. But what they dont tell the consumers is that they are splitting their fees with the attorney and this is illegal.
Many brokers will state “brokers are better and more affordable than attorneys” and attorneys will state “attorneys will save those who were taken advantage of by the brokers.” Well, there are culprits in both camps. There are bad apples in every industry who claim to be advocates of the community.
Anyone that makes bold claims like “only attorneys should be trusted for loan modifications” or “only brokers should be trusted for loan modifications,” is living in a make believe world.
The trust should never be based ONLY on someone’s professional title or achievements; it should be based on that individual’s ethical standards as well.
I call all these so called “advocates” the “pimps and whores of the loan modification industry.”
http://sccrealestateuncensored.com/2009/pimps-and-whores-loan-modification-industry/
Update on Loan Modification | Mortgages Unzipped
[...] last blog I wrote, http://www.zillow.com/blog/mortgage/2008/10/25/the-new-breed-of-scam-artists/, was a little on the abrasive side. Why? Because Loan Modification is a new, untested industry and [...]
Jennifer
Here is a real scenario to think about for homeowners out there. Maybe it will give some hope. I helped a friend of mine, FOR FREE. She fell behind for 2 reasons. She was in a 2 year fixed loan that adjusted at the end of 2 years and when it did her payment went up from 3000.00 to 6000.00 per month. Her pay was cut back as was her husbands. All of these things combined spelled financial disaster for her family. When her 401k that she withdrew ran out and her credit cards were maxed from living on them she fell behind and did not pay her mortgage payment for 10 months. Her bank Washington Mutual did offer her help when she originally called them immediately when she knew she could not afford to pay. She was offered an interest rate reduction and a payment of about 5000.00. At that point she still couldn’t make it. I am a financial consultant and told her I didn’t see how she can afford it. Her loan amount is $700k and her home is worth $450k. Once she fell behind from her perspective her future looked pretty grim having a child and worrying about losing their home and maybe never being able to own again due to her now obviously horrible credit rating. Shame on the banks that profited and put out these stated income loans to middle income america telling them they were worthy of owning a home and now slapping their hands for taking the bait. These people are so honest they felt guilt ridden and horrible for not being able to pay their mortgage as if it were a crime. So, after much stress and anxiety and 10 months of about 100 phone calls to the bank (yes, they constantly lose items they are sent to evaluate a loan modification) this loan ended up being modified with a fee of $4,000 from the bank and her payment dropped to 2900.00 per month. Did I mention in the meantime when she could not pay her mortgage she paid off some bills and was able to save a little bit of money. This couple has changed their lifestyle to suit a budget they can afford. Maybe it is time for everyone to stop and hold some accountability for their predicament and even if they have been through some tough times get on with their lives and be part of the solutions. Part of this means being pro-active in your financial decisions. The upside of their scenario is they are happy and willing to hold on to their home and now have a 40 year fixed loan to do just that. The downside, they have no equity and may be waiting a decade to see the homes in their area increase to that point again. They kept their write off so they don’t have to give up so much money to the IRS like when they rented. Real Estate has crashed in the past maybe not to this extent in quite a while, but when we are finally at the bottom it can only go back up.
Mary
So far your article has been helpful, I’ve talked to a lot of people representing lawyers lately and they get my hopes up on modification .only to break my heart once they mention the fees they will charge and that they can’t “legally guarantee” anything to me on results. If I can barely afford my mortgage payments, where the heck am I supposed to get 500-2500$ to pay them?!
I’ve called my mortgage company a couple times now and they have said they can’t do anything to help me. At the beginning of last summer my hours were cut at work and where I was able to make payments, my husband and I were suddenly finding it hard to make them on time and afford other monthly bills as well. Right now I’m current on payments although I was late the last two months because we just didn’t have the money on time. I am also behind on my other bills as a result. As an added bonus our mortgage goes adjustable in a month and is already at a high interest rate as it is. We are trying to be proactive and avoid credit problems by trying to get a loan modification or refinance now before we do miss any payments. We are told that we can’t refinance because our house deppreciated by 60+ thousand dollars, so our only option would be modification, short sale, or forclosure. Seeing as how the bank doesn’t seem to want to work with us, we’re scared. My husband wants to know if there is anything in these new bailouts and laws passed that can help us, and how do we go about getting that “help”?
From all the information I’ve read so far it seems like the only people actually getting to work with their banks on a modification are the ones who have missed 2+ payments and not the people who are current. I would like to know if we have to be behind to get help or if we can salvage our credit and get help now before we miss?
Please enlighten me…. PLEASE!
Thanks, Mary
Jennifer
Mary,
What lender is your mortgage with???? Yes, the people behind are getting priority at the moment, but I know GMAC and Wachovia and Citi are offering to help homeowners who are still current. Here is a problem why your bank may not be helping, they can usually drop your payment by offering either a principal reduction and rate reduction or just a rate reduction, BUT you still have to show them proof of income that you can afford to pay that lower payment amount and the ratios they are looking for is about 38% of your income to pay for your bills plus mortgage, taxes, and insurance. Example If $2000 were your newly offered modified payment plus all of your bills total say $500 that means with an expected $2500.00 plus say another 350.00 in property taxes and insurance monthly you would have 2850.00 going out and they want to see 7500.00 of gross income to qualify. Qualifying for these modifications is very similar to qualifying for a refinance with a twist. Keep calling everyday and prepare your paystubs, bank statements, and recent W2’s. Fill out all of their forms and or give them financials over the phone and keep it simple. You may have to lower your bills a bit to show you have enough income to qualify. Have you considered modifying your credit cards to lower those if you have them? Lowering bills helps qualify. In the end if you don’t get the response you want the first, second, third times, keep calling.
Jim
People in trouble with their mortgages should find free professional consultation. Mortgage modifications can often only be done once or have limitations on use. A successful modification with the best possible outcome requires careful preparation. A homeowner must show a viable case for modification to be considered. They must have detailed information on debt to income ratio and budget planning. Free information is at http://www.wemodifyyourmotgage.com . Find out what it takes to qualify before you approach your bank. Carefully prepare you documents for submission to the bank. You are preparing to take advantage of a clause in the mortgage contract.
Jerry
I had a very bad experience with Brian Brady of San Diego. It was very stupid of me, but after talking to hin about a VA loan, he ask me to send him information including bank statements, Income information, social security numbers and other confidential info, He call me back once and told me that I was approved. After over12 calls with no return call I became very worried. Finally i got an answer from another of his and when he answered he hung up on me. I am very worried about identity theft. I intend to call the BBB in San Diego and the Californis dept of Real Estate. I did find out that he is not licenced in the state of californis. Does anybody else know anything about this guy