Important Disclosure: This information is meant to be a general guide to consumers about what to expect from a loan modification. I currently do not do loan modifications nor do I receive any money from any loan modification company for referring people to them, although my employer apparently is setting up a loan modification team, I have yet to refer them someone. I know this information because of the estimated one thousand people that I personally have spoken to over the last year about their options and referred them to various organizations for help. I have been saying the same thing about loan modifications for quite some time - that no lender follows the same process and each individual situation is different - so do not take anything here as a “guideline” or a “formal loan modification process” . In my experience, there is no such thing as a formal loan modification process(even though there are programs recently announced such as the Streamlined Loan Modification Program).
Many people that I speak with about loan their loan modification options are extremely frustrated that their lender is “difficult to work with”. Because they have initially started the loan modification process on their own and gotten frustrated, they are now considering hiring a loan modification attorney or company who specializes in loan modifications and may have even spoken with a couple of them prior to speaking with me.
Almost without fail, I get asked this question:
“How do I know who to hire? I mean, how do I tell a *good* loan modification company from a *bad* one?”
If you are currently considering hiring a loan modification company or lawyer to help you with your loan modification, here are five simple questions designed to help you identify the “good” from the “bad”.
How do you know if you can help me?
Before you say *anything* about your situation, ask this question. Most of the time, the person shopping for a loan modification will be so upset about their situation, they will look for someone to listen to them explain their situation first.
Resist the temptation.
Ask the loan modification company “how do you know if you can help me” first and let them do the talking. Let them explain how the identify how they know if they can help you or not, what they look for in order to know if they can help someone and what they have seen as far as results.
The more information that you can get from them up front, before you tell them about your situation, the more you will get a good idea if they really know what they are doing.
Do you have 3 people that I can speak with who you helped get their loan modified?
Don’t miss this question and be sure to follow up and speak with their references first.
You will learn more from the three references they give you than you will from talking to anyone at the firm. You will learn what the process was like, how the company was to work with and what their overall impression of “was it worth it” was?
Do you plan to use violations of law in my current loan as leverage up front or later on in the process?
In loan modification, there is an “easy way” to get it done and a “hard way”. The easy way is that the loan modification company starts talking with your lender and negotiates out a loan modification - just based on “what kind of monthly payment you can afford based on hardship”. Many times, the “easy” loan modifications are done in a matter of minutes and really don’t involve any kind of negotiation - because there is not a principal reduction involved - just a modification of payments.
For some situations, this type of loan modification is fine.
But for other situations - for example - for those people who are hundreds of thousands of dollars upside down in their home… “the hard way” may yield better results. “The hard way” involves the loan modification legal staff going through your documents that you signed when you got the loan and looking for violations of law. Many loans have these violations and “the hard way” involves using these violations as negotiation for a principal reduction or even a complete rescission - meaning your entire loan is rescinded and you will no longer even have a mortgage.
How Much Do You Charge?
Note that this is not the first question to ask.
How much a company charges is an important consideration, but it is not the most important. The most important thing to consider is whether or not they can be successful at getting your loan modified and the question of “how much do you charge” tells you nothing about if they will be successful or not.
In general - expect a fee up front (generally ranging from zero to $3,000) and a fee if they are successful (generally 1-2% of your loan amount) and remember - if someone offers to do it for no money up front but doesn’t end up getting your loan modified, it is more expensive than if you paid $3,000 up front and a 2% of your loan amount as a success fee.
Can you tell me what to expect in my situation when working with <insert your lender>?
Listening to the answer to this question will tell you something about their overall experience. If they say that they have never worked with your particular lender before… it is a sign that they probably don’t have a lot of experience yet.
If they tell you that they have a dedicated person to work with them at your lender - it is a sign that the “easy way” kind of modification will be easy - but “the hard way” is still going to be “the hard way” even if they have a dedicated person because it is going to involve attorneys fighting with other attorneys.
If you are currently looking into hiring a firm to help you with your loan modification, by asking these 5 questions, you will be in a much better position to identify the “good” from the “bad”. And if you are in a situation where a loan modification is an option for you, you can’t afford not to invest the time to choose wisely.
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
33 Comments so far
Finance & Loan » Loan Modification: 5 Questions To Ask Your Loan Modification Lawyer
[...] more here:? Loan Modification: 5 Questions To Ask Your Loan Modification Lawyer Post Date:January 31, 2009, Category:Uncategorized Author: admin, . [...]
Lauri
I just wanted to say I think both of your posts on loan modification are great. They’re easy to understand even for the simplest borrower.
Thanks for sharing your expertise.
Justin McHood
Lauri,
Thank you for the kind words!
Justin
beachdude
The most common mortgage modifications are listed below:
lowering the mortgage interest rate
reducing the mortgage principal balance
fixing adjustable interest rates within the mortgage
increasing the loan term throughout the mortgage
forgiveness of payment defaults and fees
or any combination of the above
Check out this public service site: http://mortgagemodificationinfo.org
How Many People Does It Take To Qualify For A Loan? | Mortgages Unzipped
[...] of both of their credit profiles going-down-the-tubes unless something happens where they get a loan modification done and they are able to save their house from [...]
Loan Modification
Thanks for this, Justin.
I’m glad to see that someone isn’t towing the line of either the woefully misinformed news media or the questionable mortgage modification experts. Both sides are too extreme in what they’re saying.
I can’t understand why most reporters, producing so-called “consumer protection” pieces, keep insisting that paying someone — ANYONE — to help with a loan modification is a no-no.
Talk about having done no research whatsoever. Of course you should expect to pay someone for their expertise! You make some great points here about to decide if the person you’re talking to is indeed one of those genuine experts who deserve your money, versus someone who just talks a good game.
Then on the other side we have those very same pseudo experts who simply have caught the scent of an opportunity here (mortgage brokers who have to make up their lost income somewhere??).
Anyway, the point is, you’re exactly right. Bottom line is to show some common sense and don’t let your desperation cloud your judgment.
But also don’t be so defensive that you turn down genuine offers of help.
Just my two cents.
Federal Government To Spend $100 Billion For Loan Modification Programs? | Mortgages Unzipped
[...] you thinking of hiring a loan modification lawyer to help you get your loan [...]
anncy graziano
One company asking $ 5000 dollars for loan modification. but i asked for referal.They could not give me . They were telling ,they are not lawyers . but they have lawyers if they could not do it after they negotiate with lenders. They will use lawyers or consult if they have to. Right now they do not need it . so what shall I do .I am not sure what to do.I already gave $5000 dollars . If I search for some body else ,I do not knwo if they give that money back. They ahve not done anything yet as I have not given the hardship letter . They told me they are waiting for my hardship letter to start the process
tahnk you for your advise
Justin McHood
@Anncy,
For some reason, a blinking red light goes off in my mind that says:
“GET YOUR MONEY BACK RIGHT NOW.”
$5,000 is too much money to pay up front - when many loan modification companies will help you for a fraction of that up front.
If the company won’t give you your money back, contact your state attorney general to get them to help you.
To anyone else who reads this - please beware of high up front fees when dealing with loan modification companies, $5,000 is too much.
Justin
carl
loan modification ,
I am thinking about going thou A company called directapply this is a loan modification company that will help me modfily my home loan the person I am talking with is for sure this will work for me just want to make sure Directapply is a good modification company they want 3,500 to do this he told I dont have to pay my mortgage for 3 months or till this modificaton is done, not paying my mortgage for 3 months could the mortgage company forclose on me how does this work…. thanks carl
Carol
I am curious also (as Carl) if I did not make loan payments for 2 - 3 months what happens to my home? I believe if I make the payments the loan company will say, well she can make her payments see = so why should we adjust her loan. It’s a catch 22.
Loan Modification Lawyer
A Loan Modification can…
- lower your monthly payment
- fix your interest rate
- eliminate late fees, penalties, interest
http://www.loanmodlawyer.wordpress.com
Patricia Warmhold
COUNTRYWIDE (BANKAMERICA) IS THE SERVICER AND CITIMORTGAGE IS THE INVESTOR OF MY LOAN- WANT TO MODIFY BUT NOT ABLE TO WITH COUNTRYWIDE - ARE YOU A MODIFICATION ATTORNEY- WITH NO MONEY UPFRONT- WILL PAY FOR YOUR SERVICES AT THE END WHEN Y OU GET RESULTS AND MODIFICATION IS SUCESSFULL- PLEASE LEET ME KNOW-
PATRIICIA WARMHOLD - BEST TIME TO REACH ME IS MORNINGS UP TO 12 NEW YORK TIME 516-495-4556
Peter Collins
Aways use an attorney for your loan modification. But I would argue that no loan modification is “easy”. Each case has its own unique set of challenges.
Lanita
How can I find a reputable loan modification lawyer in Southern California. Is a loan modification lawyer suppose to ask for money up front?
Ledeen
I recently requested a loan modification through my new loan servicer OCWEN and received a letter today stating I did not qualify.
Yet, I have one of those horrible OPTION ARM Loans, that keeps going up and will soon reset to more than 60% of my income. Even the interest only payment is well over 38% of my gross.
My house is mortgaged on a first at 618K, a second at 114K, and its now worth 350-400K based on the last several sales on my block foreclosed homes.
I have a steady good job. I have not been late (yet) although my property taxes are late.
The loan was through Downey Savings and an unscrupulous broker who had actually gotten me a great loan the year before. But on this one he lied about what my payments would be, and the loan documents did not state any payment on it but the minimum payment, (hence I had no way to know at the time he lied)
I cant figure out how they figure I didn’t qualify and there is no way to speak to a human being at OCWEN who works in their modification dept.
So my next step was to try to find a lawyer, but I dont have the full deposit, and now after reading so many complaints I am scared to death of who I should go to.
I am in Southern CA , any suggestions?
Paul C
Great Advice Justin!
My cousing worked with a pro bono law office in AZ but unfortunately his lender Chase shortsold his home out from under him only being 3 months in arrears. So yes it can happen.
For you SoCal people try Eugene Alkana Law offices in Pasadena. I spent a half hour on the phone and they seemed to know what they are doing. They told me upfront the costs (3000) and that they go for the “hard-way”.
Im not sure what I am going to do because it really requires going into arrears and b ecause of what happened to my cousin.
Chris Wilson
I will tell you this. Our company themodificationsquad chardges 2495 upfront fee for the HAM program. This is attorney representation and 100% money back guarantee. Its plain and simple, if you qualify and there is enough beneift for the borrower, our attorneys will take your case. We have and excellent product at a great rate with outsatnding terms. You owe it yourself and your family to explore every option available. If we save you $500 a month, this fee is very nominal seeing it will be recouped in the first five months. If you wish to see if our company can help, we offer free prequalification.
Be careful when apllying with your lender. You only have one shot at qualifying for this plan. Once, disqualified, you are finished. You do not want to be kicking your self when you were qualified but took the wrong course of action and now are continuing to struggle to make your mortgage payments. Give me a call 949 333 4007. or go to loanmodificationmadesimple.com to explore our company. I would be happy to discuss any questions and point you in the right direction. Take care and good luck!
JLoanMod
You Do Not only have “one chance for a loan modification”.
I have seen people turned down when they go DIY with their lender, then use a loan mod company and get it done. It’s not a “one shot” deal.
It all depends on how the file is underwritten and presented to the lender’s asset manager. When the file is presented as a proposal, instead of an adversarial threat, to the asset manager - you would be surprised at the positive negotiation that can take place.
It’s all about “the numbers” as to how your present it to the asset manager, and if you can show the file has a better opportunity of becoming a good performing asset to the lender’s bottomline.
There is nothing “easy” about loan mods, however most of them do not need to be approached the hard way. My experience in working with 100’s and 100’s of files is that most homeowners are in a huge financial bind and want to keep their homes in a more affordable payment plan if that can be achieved - while few others have the extra resources to fuel a legal dream team to fix their problem.
With a proper underwriting method based on accurate financial data and a guideline qualified proposal to their lender, most people can expect a loan modification that brings their payment into a reasonable payment range where they can make it ontime and get back to living out the rest of the days of their lives.
Thomas Hayes
There has been a lot of attention to loan modification in recent times. I have found an endless amount of scam warnings concerning this issue. of course nobody wants to be scammed out of money for nothing but i found a tool that you can use to find out if you qualify just go to http://www.fedmortgageloans.com and see if you qualify.
The attention the new Obama administration has given this issue a lot of attention and has made the eligibility requirements much easier to meet. Almost anyone with some sort of hardship is potentially eligible. That being said obviosly some people are more eligible than others… just check out the site to see if you are one of the many who are
Dan Bennington
How are the payments based on a loan modification. Are they based on 38% of your gross pay divided by 12? Or are they based on 38% of your gross, minus other payments, then divided by 12?
Loan Modification
thank you for this information. Great article
Paul C
JloanMod, it is unfortunate that its all about the numbers. People who get in over their head get bailed out while people who can make their payment get stuck with all the market impact. The Fed continues to print money to replace the large losses the banks are taking on but only the people who signed up for a bad mortgage or lost their job get to share in this benefit.
Your comment about a few people looking for a dream team to fix their problems is pretty ignorant. Why should someone who can pay their mortgage but doesnt want to absorb 50% or more of their mortgage that has no value? Many people are in a situation where there is no incentive to pay their mortgage even if they can, other than fear, not wanting to have to move or ruin their credit.
Susan Foreman
I can afford my mortgage. I have two mortgages for a condo. Paid $365,000. for a place that’s now $179,000. I am not behind. I have a 6.5 interest rate and an interest only. Is there anything I can do? Can I request a loan modification? I would rather work with a lawyer. Can anyone recommend one? I would like to consolidate the loan & lower the interst rate and bring down the principal.Am I dreaming?
Cristian Montalvo
Hello all, I am glad I came across this article, first of all it’s very informative and second I also noticed that some of the people who have commented still have some additional questions.
If I may, I have been in the Mortgage Industry the better part of eight years; I have worked for large banks and small broker offices. I am currently working for a reputable Real Estate Attorney, I was hired because of my experience and knowledge in this field.
I would like to comment on the suggestion that the consumer should ask for three references that the company has done a successful loan modification for… even though it sounds like a good idea all Real Estate Attorney’s will refrain from doing this as it violates the client confidentiality agreement.
For example if you have a successful loan modification, would you like complete strangers calling you to ask you questions on your personal matter?
My suggestions are that you ask for the following things.
1. Do you have an in-house Real Estate Attorney?
Most loan modification co. outsource the attorney or negotiatos. The problem with that is that you don’t have up to the minute updates on what is happening with your file. Also, because these lawyers take on business from different loan modifications companies they get overwhelmed with business and pay little of no attention to the client’s specific needs.
2. Do you have examples of current or past client’s loan modifications?
All modification companies will tell you how great they are… ask them to show you. If they are as good as they claim to be they should not have a problem showing you examples of past successful loan modifications.
3. Do they offer a contract and a guarantee in writing?
Be careful. My number one complaint is.. “my bank isn’t willing to help”.
Guess what my number two complaint is?
“I paid a loan modification place and after 5-7 months, they didn’t do anything for me”
My next question to the client is… Did you have a guarantee?
Some say “no”, others say “yes”,, was it in writing? ”no”.
This is a waste of time and a waste of money.
Recap:
Ask for a Real Estate Attorney
(keep in mind that loan officers specialize in finding you a loan – Realtors specialize in buying and selling homes)
Ask for examples of loan modifications recently completed.
Ask for a money back guarantee in case the loan modification doesn’t go through.
Don’t be afraid to ask questions. Good Luck,
I can answer any additional questions you may have regarding a loan modification.
949-419-8922
frank
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companies & Reliable individuals in need of
financial help at 2 percent, Do you have a bad
credit?… You can Reach us via.
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Free Loan Modification Kit
Loan mod attorney seem to be the best way to go if your going to pay for a loan mod service, however watch out for the fake “Law Firms” where an attorney basically rents there license out to some company so they can call themselves law firms. before you pay for anything I would ask to directly speak w/ one of their “Attornies and see if they actually even work in the same building…Often times they are no where to be found.
Josef Culik
For a loan modification, one of the most important things a homeowner can do when looking for a lawyer to help is to make sure that he or she licensed to practice law in the state you live in. For example, I am a licensed lawyer in Massachusetts — in my own loan modification law practice I only handle Massachusetts residents. Because I can actually sue the mortgage company here in Massachusetts, I have a more leverage than an out-of-state lawyer.
JAMES
I AM SEARCHING FOR A REAL ESTATE ATTORNEY THAT DOES LOAN MODIFICATIONS HERE IN TENNESSEE. BY THAT, I MEAN HAS AN OFFICE IN TENNESSEE.
Cristian Montalvo
Dear Homeowner,
I wanted to share some good news with you. You DO NOT have to pay upfront to have your modification-related documentation reviewed by a Real Estate Attorney. In fact, we can even prepare a Hardship Package and have it ready for submission to your lender for consideration by our in-house Real Estate Attorney.
We offer a complimentary consultation, complimentary financial evaluation.
Fees are paid to the Law Office after services are rendered, which means that you don’t have to put out a single penny out of pocket until the Law Office performs the work for you.
Keep in mind that we have an open-door policy, so you can set an appointment to come in and speak directly with the attorney.
IMPORTANT NOTE: Any company that contacts you and offers to help you with your loan modification, but is asking for money upfront, is not complying with the new California State Law SB-94, so please be careful.
Should you have any questions, please feel free to call me at anytime. 949-419-8922
karen
Is $2,800. up front too much to pay for a loan modification. The company that I am considering is located in California and I live in Virginia, should I be looking for someone in VA? I heard their ad over the radio. This company says they are listed the the better
business bureau. Do this really mean anything when it comes to loan modifications?
Any suggestions on any reputable companies in the VA area?
Thanks,
Karen
Susan Hluska
I have been offered a Modification to the Loan Repayment and Security Agreement with Dakota Investment Group, payments to be made to RealEcon in Yorba Linda, CA. They are asking for $500 Loan Modification Fee. The whole thing seems too good to be true. I severly behind on my mortgage and what they are offering would solve my problems. Is this reputable or am I being scammed? Can anyone help me?
Pat
New Law SB 94 Oct. 11 2009
Should I pay an attorney up front fees?
If so how much? So called unbundling fees?
I have three investment properties that need a fix with Wachovia
Help Notice of Trust Sale Dec 2, 09