Being a “mortgage guy” in today’s world is kind of surreal. I talk to many people each week who currently owe more than their house is worth and may (or may not) be behind on their mortgage payments.
Which means they pretty much are not going to be able to refinance their home with the current programs out there.
So if you find yourself in the situation where you are falling behind on your mortgage payments (or about to) because of some kind of economic hardship that you are going through, these are your basic options:
- Try to get your current lender to modify your loan
- Try to qualify for the FHA Hope for Homeowners Program
- Try to qualify for the FHA Secure Program
- Try to do an FHA Short Refinance
- Do nothing and most likely end up in Foreclosure at some point
As we have wrote before, the FHA Hope for Homeowners program and the FHA Secure program are semi-not-real — meaning these loans are just not getting done in most situations even though the media makes it sound like they get done all of the time.
So it seems that most people I talk to are a candidate for a Loan Modification or an FHA Short Refinance or Foreclosure.
Many times, I am asked “what is the best way to get a loan modification done” and my answer generally is “try to do it yourself and if you end up frustrated, then hire a loan modification firm to represent you to work with your lender to get your loan modified.”
Here are 4 tips when deciding which loan modification firm to hire that can hopefully ensure your chance of successfully getting your loan modified at a fair price:
Make sure that the loan modification is “attorney based”. This means that you will actually have a legal firm representing you, not just a sales organization. The loan modification company will be working with your lender’s loss mitigation department – and somehow these departments seem to respond better to attorneys than they do to people who are not attorneys.
Shop around. Loan modification companies have all different kinds of pricing models — some charge $3,000 up front and no guarantees. Some charge $500 up front, then 2% if your loan is successfully modified. Some charge a flat-fee. There is a wide variety of pricing models, so be sure to speak with AT LEAST 2 or 3 different companies before making your final decision.
Look for them, don’t let them look for you. If you are contacted by someone about “having your loan modified”, be very careful. Many times, these are the most aggressive sales organizations. Good loan modification companies don’t use these tactics, they know that there are plenty of homeowners who need their help and don’t need to aggressively go after them.
Ask around for a referral for a good loan modification company. You may be surprised to learn how many of your neighbors have had their loan modified already. Many of them used a loan modification company to assist them in getting it done — don’t be afraid to ask for a referral.
Do loan modifications work?
Yes.
I have heard and seen probably hundreds of success stories of people getting their loan modified — and in a time where so few (if any) people got a FHA Hope for Homeowners loan, it makes sense to be smart about how to improve your chances of getting your loan modified.
Learn How To Get Your Loan Modified On Your Own Without The Help Of An Attorney
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yes, loan modification is the answer for foreclosure and short sale.My friend worked at Maximondo Modification Consultant Corp. 7735888776 of chicago,il 60618 and they told me they helped a lots of homeowners although Lender are the one who give too much pressure and headache to the homeowners. They wished that the government shold intensify and streamline the loan modification. The lenders takes too long to approve the loan modification. They should enforced that approval must be made wihin 30 days and must have a direct contrac tperson,tel,fax an demail address.
Hi Justin – It’s nice to see more people like yourself that are offering bona fide information and suggestions for the underwater loans.
We too have also never found any lender truly funding FHA Secure or H4H. It is quite frustrating since the media is falsing advertising these options to home owners. We’ve found people calling a Short Refinance, Hope 4 Homeowners when in fact they are two totally different programs with different guidelines.
@Casey,
Thanks for stopping by — it seems like *most* of the people that I speak with are currently underwater and just need more information about what their options are.
I find that most (if not all) of them end up with either a loan modification, a short refinance or a foreclosure. Very few (if any) FHA Secure or FHA Hope for Homeowners loans are being done.
Great tips! There is so much to learn when it comes to mortgages. The more information the better able you are to make a good mortgage decision when the time comes.
Justin – great tips. Although a bit in self-interest (since I am a lawyer who helps clients with loan workouts), it should also be pointed out that having an attorney represent you will ensure that you are aware of other considerations when making the decision about loan modification, short sale or going into foreclosure. Particularly important in Arizona are the anti-deficiency statutes, but also important are considerations surrounding taxation on any forgiven debt amount in a foreclosure or short sale situation. Secondly, as you pointed out, a letter or call from an attorney to a lender’s loss mitigation department often perks up a few ears and can speed up the process.
While I don’t have experience myself with these quickie loan modification outfits, I expect that many of them are not equipped to advise homeowners on these issues – so homeowners should tread carefully, particularly if attorneys are not involved.
Great blog and I look forward to checking back for more updates. I will be covering some legal issues relating to loan modifications on my blog at http://www.desertlawblog.com from time to time.
@ Paul
Thanks for stopping by and adding this insight! I am turning this information into a post now and will add “one more reason to get a lawyer involved!”
As we have said before, we don’t actually have anything to do with the loan modification process — we just try to find great law firms to refer people to.
Thanks again for the great info!
Justin
We offer a flat fee– and only $500 to get started.
And have a team of attorney’s.
This is to correct my error on my previous reply:
Yes, loan modification is the answer for foreclosure and short sale.
Maximondo is a marketing company but no longer in business since 2008. Their marketing law firm client, Law offices of Montegna, 312-788-8428 of chicago,il 60618, exponent of wholesale back processing services not open for general public and as well as conduct trainig for loan mod brokers who want to have a loan modification companies and they told me they helped a lots of loan mod brokers, although Lender are the one who give too much pressure and headache to the homeowners. They wished that the government should intensify and streamline the loan modification. The lenders takes too long to approve the loan modification. They should enforced that approval must be made wihin 30 days and must have a direct contract person, tel, fax and email address. The lenders and government should pay the 3rd party loan mod companies so that they will not ask the fee from homeowners. In Illinois, lawyers are the only one to accept upfront fee.
Correction. Maximondo is a marketing company and no longer i businss since 2008.
yes, loan modification is the answer for foreclosure and short sale.My friend worked at Law and accounting office of Shawn Kim of chicago,il 60618 and they told me they helped a lots of homeowners although Lender are the one who give too much pressure and headache to the homeowners. They wished that the government should intensify and streamline the loan modification. The lenders takes too long to approve the loan modification. They should enforced that approval must be made wihin 30 days and must have a direct contract person, tel, fax and email address.
The government should treated fairly the 3rd party loan modification and lenders must be penalize for every denial of loan modification since the government is paying $1000 per file.