Loan Modification Q&A

What is a loan modification?

A loan modification is when you lender modifies the terms of you loan in a permanent or semi permanent way. This can include term, interest rate, principle, and past due payments.

Can I do a loan modification myself?

Yes. If you try a loan modification yourself and have no success after a few weeks please call us. However, if you have provided the lender with income information that disqualified you it may be irreversible.

Why do you charge an upfront fee?

Depending on the type of loan modification service you choose you are paying for services as they are rendered. Most companies will charge a fee after the initial pre-qualification for processing. Some attorneys collect a retainer upfront to ensure there services are paid. When the modification is completed many times the lenders will send the terms of the agreement directly to the homeowner. Some times this has created a collection issue for loan modification companies who successfully reach a loan modification for homeowners who don’t want to pay after they have signed the aggreement, or lose their job or change their mind during the process.

Is the fee non-refundable?

Some processing and attorney fees are non-refundable depending on what type of modification program you choose.

Do you guarantee the results?

No. You are paying for a service, not a result. Anyone who guarantees you a specific result in not being honest or upfront with you.

What are common results for a loan modification?

Most of the loan modifications are coming back generally at, or just below market interest rates which are currently around 5%. We have had them come back much lower, but those are the exceptions.

We are receiving FIXED rates some of which go up after 4 to 6 years. Some are Fixed for 30 or 40 Years.

Sometimes past due payments are forgiven, sometimes they are added to principle or re payed.

Will they reduce my principle?

Most lenders are currently not reducing principle. I would be weary of anyone promising you they can reduce your principle with loan modification in 2009.

How long will it take?

Generally it will take 30, 60 or 90 days.

Do I need to be delinquent?

Yes and No, it depends on your lender. Either way you may present a stronger case when you are delinquent but NO ONEĀ  (in their right mind) will tell you to stop paying your mortgage for liability reasons. Countrywide (BofA) will not consider a loan modification unless you are 60 days delinquent. It will then take about 60-90 days from that time to sign the loan modification paperwork. Hover at 90 days (most of the time) they will file a notice of default and start foreclosure. If you re-instate you loan at that time they will again not consider you for a modification.

What is a forensic loan audit?

A forensic loan audit is when you have an attorney who specializes in mortgage documents review you original loan documents to see if the lender violated any laws. Specially RESPA and TILLA. Lenders who violated RESPA or TILA can be liable for steep penalties or can be forced to rescind the loan entirely, refunding closing costs and all interest paid by the borrower.

Some attorneys will use this as leverage to negotiate an aggressive loan modification.

What is a loan rescission?

Loan rescission is when you basically “undo” you loan because your lender violated the law.

To force your lender to rescind your loan, you will have to sue them and force them to do so.

I don’t see this as a viable option unless their has been a serious violation of the law and predatory lending committed. Even then it could take years in court, and many more years off your life.

Can I still apply for a loan modification if a trustee sale date is 2 weeks away?

Yes, you can apply but you should be informed that loan modifications have a significantly higher risk of foreclosure when they are started toward the latter end of the foreclosure process. You will have a much greater change of postponing a trustee sale date to complete a short sale than you would to try and start a loan modification.

Doesn’t my lender have to modify my loan because of the Obama Program?

No. Most of the lenders are private companies and currently not forced to participate.

They are given certain “incentives” though, through the “making home affordable program” and other programs to participate.