Own Sweet Home Blog

I have received quite a few phone calls for the new buzz word circulated among the home owners.. Loan Modification.  So I decided to blog it and answer some common questions once in for all.

Why fix if it ain't broken and prioritization, are the two major rules for loan modification.  First of all, it is against the California law to charge upfront fees for loan modification process unless prior approval is obtained from Department of Real Estate.  So anyone calling you to have your loan modified for a fee, beware.

Recently issued DRE commissioners report indicates that: "Unscrupulous operators comb the public records to obtain information on the properties against which a notice of default (NOD) has been filed.  These operators then contact the borrowers with promises of rescue in exchange for an advance fee.  Often, the advance fee is collected by credit card and ranges from several hundred dollars to several thousand dollars.  To induce the borrower to pay the fee, scammers tell the borrower they have expertise and connections that ensure a loan modification can be negotiated with the borrower's lender to permanantly reduce the payments to sustainable levels.  However, once the money is collected, no work is performed and the victim loses their home to foreclosure."

This does not mean that there are no legitimate businesses that engage in foreclosure consulting and, in fact, collet perfectly legal advance fees.  Real estate broker providing such service must get the advanced fee agreement approved by the department of real estate.  All advance fees are held into broker's trust account until specific services are performed.  However, once NOD is filed Foreclosure Consultant law (civil code 2945 et seq.) precludes from collecting advance fees.

So assuming you do find a legitimate loan modification provider, there are no guarantees that you will get the results.  As everyone knows the number of borrowers defaulting on their mortgage payments has skyrocketed in recent months.  This in itself has clogged the service providers bandwidth.  So your lender when he looks at your case, looks at how long before your home forecloses.  If you are close to getting foreclosed, your case is looked at immediately than if you just received a notice of default.  If you are current on your payments and struggling to make them, tough luck.  You cannot get a benefit of loan modification unless you are ready to let go your credit worthiness.  This loan modification process, is a simple result of prioritization which lenders must do in order to work within their aleady streched resources.  Logic is, why fix if it ain't broken?

If you need specific advice on your situation, call me.  No guarantees, however, there is a posiibility of refinance by negotiating the payoff from the current lender(s), assuming you qualify irrespective of the property value.

Look out for my next month's blog: "Short sales and how to benefit from it?"