Loan mods a lost cause

Submitted by Jim Thornton on June 3, 2009 - 6:23am.

In Pennsylvania state agencies have identified approved credit counseling agencies in their literature. This information is mailed to those behind in their mortgage payments when they receive an Act 91 notice which is a notice unique to Pennsylvania borrowers who are behind in their payments. The cost of counseling is free to the consumer and the approved credit counselors receive a fee from a state funded agency to help the consumer work through the loan modification process. The amount of Act 91's are staggering and the amount of time required to appropriately help a consumer work through the loan modification process can be overwhelming to the credit counseling agencies. The fees the agencies receive are fixed per client but the amount of hours trying to service a consumer who is poorly organized in their personal record keeping can far surpass the fees the credit counselors receive from the state. There are too many borrowers who need help and not enough counselors to service them. Most of the successful loan modifications that I have seen approved required the assistance of an attorney who understands the unique issues related to the process. In my limited experience I have found that introducing an attorney into the process early helps to stall the foreclosure process and adds the ample time required for the loan modification process to take place. Too many consumers have made prepayments to loan modification firms and never received proper service. When an attorney intervenes they bring an arsenal of weapons to the loan modification and foreclosure process that lay persons don't have access to. To save your home, have a greater chance at mortgage or credit card debt reduction, achieve a loan modification or be able to stay in your home for up to a year while attempting to resolve your mortgage issues you need the services of a good attorney with the specialized skills and background knowledge required to successfully achieve a loan modification. Not all attorneys are created equal and choosing a competent loan modification negotiator is key to achieving an acceptable outcome. Fees that I have seen in Pennsylvania have ranged from $1250 to $2500 for the loan modification and fees of 10% to 20% percent of any mortgage or other debt reduction negotiated by the attorney. Most recently a former client of mine had their attorney negotiate a $125,000 reduction in the mortgage amount on a mortgage amount just above $900,000. The process is not yet complete but that is the offer the lender made to the borrower. That same attorney negotiated a rate reduction from 8 7/8% to 3.6% for another client with a $220,000 mortgage. The new rate is good for thirty years. Unfortunately, most borrowers do not know who to turn to when they find themselves having difficulty paying their mortgage.
Jim Thornton
Re/Max Preferred
610-325-4100
Mobile 610-506-0802

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Submitted by Maya Thomas on June 3, 2009 - 9:23am.

Loan mods take short sales and foreclosure off the market and that is THE key to stopping property values from falling.

Maya Thomas
REALTOR
http://www.ShowcasePortfolioProperties.com

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Submitted by Tina Merritt on June 3, 2009 - 11:31am.

A loan modification is akin to putting a bandaid on a bleeding artery. Then again, if the property is going to go into foreclosure anyway, it's better for the bank to have someone living in it and taking care of it rather than leaving it vacant.

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Submitted by Wenceslao Fernandez Jr, BS, Realtor, CDPE on June 8, 2009 - 12:29pm.

For a long time, I had searched for a solution on this loan mod business for my clients and customers.

Then, Florida put a stop to this by legislating the process and controlling who gets paid and how.

Finally, Obama came with a plan many felt would never work (as the HOPE program did - didn't).

However, just 2 days ago, I spoke with a colleague who told me that after several months fighting this, using the Making Home Affordable (http://makinghomeaffordable.gov/) plan, she was able to get her mortgage reduced from about $2k/mo to about $1,300/mo while her file was being reviewed, and expects the final tally to be about $1000/mo or so (I'm paraphrasing numbers so...don't quote me - but the numbers she gave me are close to these figures).

The caviat was that in 5 years the rate would go back up form 2 to 5%, but that they would keep the payments to within 31% of her household income and that the new rate would be for the life of the loan. Not bad.

In addition, using the same plan, her sister was able to get a balance reduction of $30k. Though we didn't get into the details of this arrangement, she offered that it saved her sister's home.

Times are changing and this shifted market may begin to shift again if people continue to get true help like this. Let's pray that's the case.

Meanwhile remember: Luck is when Preparation Meets Opportunity

http://MiamiRealEstateKing.YourKWAgent.com
BLOG: http://MiamiRealEstateKing.WordPress.com
Certified Distressed Property Expert
Miami-Dade County, Florida.

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Submitted by JarodH Hert on October 27, 2009 - 10:36pm.

The need for credit counseling and debt counseling seems to be at an all time high. Credit counseling is especially warranted when terms for large financing, such as for an auto loan or mortgages are typically confusing. (Some believe this to be purposeful.) The NFCC or National Foundation of Credit Counselors found that a surprisingly large amount of their clients knew very little about the terms of their car and home loans. It's been argued that terms and conditions of loans are often made byzantine purposefully, to obscure them from the consumer, but that aside, it is definitely clear that some credit counseling, credit repair, and a rise in financial literacy is something we all could use.

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