The other night, I found myself in the twilight zone and was having flashbacks to the year 2005.
I was at a neighbors house and he was having a “neighborhood get-together” with a handful of other families. We live in a newly built neighborhood and new people are moving in all the time, so I was meeting a few of our neighbors for the first time. One of them asked what I did for a living and when I answered “oh, Tammy and I are mortgage folks”, it was the trigger where the twilight zone theme started playing in my mind.
If you lived in Arizona in 2005 and attended a neighborhood party, what was the main topic that seemed to dominate every conversation?
In 2005, the main topic that dominated neighborhood conversations all around Arizona seemed to be the recent run-up in home values and “could you believe that so-and-so paid how much for that house?”
Fast forward to 2008.
The main topic of our neighborhood party today?
“Can you believe what so-and-so’s bank did to modify their loan? Their new house payment is only going to be __________ for the next 5 years!”
I left the party scratching my head… I mean – it was full of all kinds of stories about people getting their loan modified. You almost felt out of place there if you hadn’t had yours modified!
I would estimate that a full 25% of all of the people there had already had their loan modified and after the stories that were being told, I wouldn’t be surprised if the other 75% wasn’t far behind them in getting the process started.
Are loan modifications real?
Yes. Yes, they are.
And they apparently are only going to get more popular in coming months if/when the federal government begins to encourage lenders to modify people’s loans.
Learn How To Get Your Loan Modified On Your Own Without The Help Of An Attorney
{ 9 comments… read them below or add one }
can you fill me in on how to get my loans modified????
@jeff just responded to you via email!
It’s interesting that we have been doing loan mods on a consistent basis for the last 6 months, and how it is just now becoming the buzz word. What’s also interesting is the number of loan mods being done in the industry, only about 10% nationwide will actually be changed over the next 12 months by the lenders. What about the other 90%, well let’s just hope the homeowners are able to make their payments without any problems.
Let me also mention that the lenders will never loose money, so hopefully you will get a decent loan mod that isn’t really just taking advantage of you for a second or third time. Consider who gave you the mortgage the first time, your current lender. I’m not trying to advertise our services here, that is not my intention. I do recommend however that you make sure your loan modification is good for you long term, not just over the next 12 months.
Have a professional look at the paperwork before you sign it. We have many clients who use our service after their lender offers the loan mod. Not just us, many loan mod providers see these homeowners using their service.
Thank you for your time and I hope this helps some homeowners make better decisions about their loan mods and from losing their homes.
Maybe Justin and Tammy will provide this service too in the future. If your interested in doing that simply for your clients Justin, email me to find out how.
@Raymond
Thanks for stopping by our site!
We first started blogging about loan modifications in July and many, many, *many* people that we talk to who can’t refinance really can benefit from a loan modification and we try to refer them to great companies who can help.
We do see a common theme of the consumer trying to work with their lender and getting nowhere — only to hire a reputable loan modification attorney and have their loan modified.
Are loan modification companies worth the money that they charge? In general, our opinion is yes because they are getting loans modified where consumers have not been successful.
Tammy and I have decided to stay in the loan origination business and out of the loan modification business, thanks.
But this does highlight a point — there are many ex-loan officers who are now in the loan modification business, and as Raymond mentioned “consider who gave you the mortgage the first time…” how ironic it would be if you actually ended up getting a loan modification from the same person who gave you the mortgage!
So proceed with caution when hiring a loan modification company. Just like everything else in life, there are good ones and bad ones out there.
I am happy to be a resource if you need it in pointing you in the direction of a few good ones, I have personally met with about 10 CEO’s of loan modification companies (and blogged about at least one of them) and can give you a menu option of good and bad points about each one.
Justin
I would be happy to discuss the loan modification process with anyone. I have been helping homeowners for 3 years. I will not offer any crazy low rates and massive guarantees, just honest information and real life cases that I have personally helped. Please call me at 1-888-612-4852.
@Chris
Thanks for stopping by – we have just added a page where we list different loan modification contacts that people can call if they are interested in getting help with their loan modification.
Feel free to call me if you want to be on the list – 480 374 0303.
Justin
Check our site for actual modified loans. The trick is how much leverage the borrower has. If you have equity and can’t make your payments, you will absolutely NOT get a loan mod. Why should the bank modify your loan? Sell your house is what they’ll say, and the fact you can’t make a payment disqualifies you as well.
If you’re current with your payments, you do not qualify for a loan mod. Why? Because the Loss Mitigation Dept. is who modifies loans, and they will never seen your loan on their radar until after you are late on your payments — get it, they mitigate loss. If you’re current and on time, you’re an ideal customer and will never cross paths with the loss mitigation dept.
So you must be late on payments, which is something a lot of people just won’t do even if they’re stuck in a payment that will destroy them in the near future. Also, you must have leverage and understand that you are not be willing to employ it. If you are upside down in your home, try and find out by how much. If, say, you owe $100K more than your house is worth, you actually have real leverage and have a good shot at a loan mod. Eventually it will become a simple risk calculation for the lender(investor). If they take the house back in foreclosure, how much do they lose vs. lowering your rate and/or reducing principal. So the more they will tend to lose in foreclosure, the better your loan mod will potentially be. Simple. The borrower must demonstrate that he can make payments, though, or the investor wouldn’t bother offering a modification. The borrower should also explain why he was not able to make those earlier payments — hardship. So if the borrower is upside down, has high interest loans, but also can make a payment but just can’t afford his current payment, I absolutely love his chances of getting his loan modified.
For the rest of us stiffs out there, ask yourself what leverage you have and then try to apply it. But you have to be willing to stop making payments and make your move, which is risky and scary. And you better be pretty sure you have real leverage. I will only accept clients that are heavily upside down, either late or about to be late, know for certain that they must either modify their loan or soon lose their home, can show hardship that has caused loss of income, especially if they are late, but can prove that they can make a payment if the original was reduced. These clients will get a good loan modification. And if they’re in a high interest ARM, they’ll be glad to know that they’ll be modified into a fixed, often at wayl below market rates. We’ve had a loan modified to 2% fixed rate before.
So what leverage do you have, and why should the bank modify your rate? Come up with a compelling reason, and by compelling reason I mean it will be cheaper to modify your loan than to _____ (foreclose seems like the best answer). If you don’t have equity, I guess that’s something. It’s worth a shot if you’ve got about 10 or 20 man hours on your hands to call your servicer and try to get through the process. But the modification will always be a financial calculation that the lender makes. He will accept a loss of this much by offering you a mod over the larger loss that taking your house would be. I’m too tired to really make my point, I think.
Maybe some people that modify loans have another viewpoint? This is how I’ve always viewed it and used to modify loans for people, and I’ve never been wrong yet.
Greg, why do you need to be behind in your payment to get your loan modified ? Also, under the new Obama Plan should it not matter whether you have equity in your home or not ?
Key Qualifications:
1. Is your home your primary residence? Yes No
2. Is the amount you owe on your first mortgage equal to or less than $729,750? Yes No
3. Are you having trouble paying your mortgage?
For example, have you had a significant increase in your mortgage payment OR reduction in your income since you got your current loan OR have you suffered a hardship that has increased your expenses (like medical bills)? Yes No
4. Did you get your current mortgage before January 1, 2009? Yes No
5. Is your payment on your first mortgage (including principal, interest, taxes, insurance and homeowner’s association dues, if applicable) more than 31% of your current gross income?
Note: if you are uncertain, click here to determine Yes No
Regards,
Steven
The Morrison Law Center takes a systematic approach to protecting the rights of financially distressed consumers by reducing monthly mortgage payments while avoiding the painful process of foreclosure.
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