In the past couple of years I have studied loan modifications and know how they work. We have had so many successful and some unsuccessful loan modifications for clients that I now have stats and figures on what lenders do, don't do, who qualifies and who does NOT qualify. The loan modification business is a tough one. A thankless job filled with so much anxiety, fear and panic. People do not know who to trust, what to do or what to believe. We have had a lot of success handling loan modifications but it has not been fun or easy.
Recently, I made a decision to no longer offer services of a loan modification company because over the last 2 years I have been through hell and back working with lenders who have made it so difficult for everyone who has tried to get a loan modification. It literally has been like pulling teeth with no local anesthesia. We have been challenged at every step of the way, on every turn and I have spent hours per day every day just protecting my integrity every time a news story came out about a loan modification company closing down or a client who came in telling me that the lender told them that we had never called them or did anything even after we have had our communication log and documentation to prove otherwise. At some point enough is enough, this is a fight that can't be won when you have lenders running to politicians whom they support and contribute to leading to changes in legislation.
The main change taking place very shortly will be the passing of Senate Bill 94 which will prohibit companies AND attorneys from collecting advanced fees for loan modification services. Many people will argue that no company or attorney should take an advanced fee and should not get paid unless the client receives a loan modification. In theory, this sounds reasonable. The problem is, how can anyone overlook this, and what company is going to pay their staff for sometimes up to 6 months or more before they get paid for work performed? What attorney will work on a case without getting paid for 6 months or more? Who will perform months of work hoping to maybe get paid? Nobody will. Or very few will. Lenders and Government want you to go directly to lenders and non-profits. We have already seen how working with lenders works and the frustration and lack of assistance is what made companies and attorneys start handling loan modifications in the first place.
Case in point; about a week or so ago (September, 2009) I was dropping off some files to a lender contact that I have for a few of my clients. This is a major lender who tells people not to work with companies. While I was waiting for my contact to come out of a meeting 2 separate individuals came in asking for assistance for a loan modification. This is how it went down:
Homeowner: Hello, I am here to get information about a loan modification, who can I talk to?
Lender: Please go the the following web-site and fill out the paperwork and fax it to this number.
Homeowner: Is there any way I can find out if I qualify for a loan modification?
Lender: Yes, when you fill out the paperwork and send it in you will know in about 90 days if you qualify. It could be a little longer.
Homeowner: I have heard that it could be longer, more than 6 months. Is there any way I can talk to someone to see if we even qualify for a loan modification before I fill everything out?
Lender: No, you have to fill out and send in the paperwork.
Homeowner: Can I talk to someone today? I really need some advice and a sense of direction.
Lender: No, sorry. Please fill out the paperwork from the web site and send it in.
Homeowner: Can you please print it out for me? I don't know if I would do it right and would really appreciate it if someone were to just give me the paperwork.
Lender: Sorry, please go to the web-site. Thank you and have a nice day as I have to take these calls.
The above scenario is almost EXACTLY as it happened. The second person who came in had about the same results and both walked out frustrated and disgusted. But this is what lenders want. This is unfortunately what Government will be steering homeowners to do. I have to believe that lenders are wanting more than anything to just clear out the inventory of bad loans, loans in default or loans that they feel will go in default so that they can take back the properties, sell them and clean out their portfolio. This HAS to be one valid theory because I can't think of many other ones that would make sense.
I believe that lenders are about to get what they want. I also believe that Government will get what they asked for without knowing the consequences of what is about to take place. I do not believe Government is acting in bad faith, they are just acting without having full knowledge of what is truly happening here. As crazy as it may seem in this day of open and free information, I believe that Government is misinformed in many ways and is making some huge mistakes that will backfire. Its about to get really ugly, really fast. But maybe that is what needs to take place. Maybe at some point you have to stop fighting it and do some number crunching to see if it really makes sense to keep that home worth $200,000 with a loan balance of $600,000. Heck, if lenders do not want to help and you are running around in circles trying to keep your home that will not give you a profit for 15 years or more, maybe selling and buying a home in a couple of years at today's values is the answer. But that is a decision that should be left to each and every homeowner.
I have come up with a spreadsheet and formula that calculates what your gain or loss would be to keep your home, do a loan modification or just sell your home and move on. The numbers do not lie. If you are interested in seeing if it makes sense for you to keep your home, send me an email to robert.aldana@myhrcs.com and we will set a time for us to meet to discuss your scenario.
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