The Truth About Loan Modification

The past year, of course, has seen an explosion of new loan money-graphics-12.140153431modification and debt consolidation companies. The new industry shares some similarities with the mortgage took advantage of people to maximize commissions. You can almost imagine a scenario where the guy who made five percent commission on your loan and stuck you with business five years ago, when the lure of a fast buck drew plenty of good, honest people but even more people who a prepayment penalty on a loan that adjusted after one month is now on the other end of the phone offering to help you get your loan modified.

Before you pay anyone, check out what might be available to you through Making Home Affordable and talk to a HUD-approved counselor.  Unless you are given reason to believe that a lawyer or a loan mod company can do better for you than you could do working through the program, you might as well save your money.

So, how do you find a reputable attorney and/or loan modification company to help you through the process. First, never go with the first person you talk to. There are companies that charge from $695 to $5,000 and higher to help you out, and it can be a daunting task to choose someone to help you out. You do not need to give each of the companies actual documentation, but you should be forthcoming about your exact scenario including loan amounts for both mortgages, approximate value of your home, and what your level of delinquency is. Your HUD-approved counselor may be able to offer a referral. Once you have talked to three or four different companies, you should have a good feel for how they compare in terms of some of the following important criteria:

What is the upfront fee?

When is the next payment due, or is there a payment plan?

What is the total fee?

Is there an additional fee to have them handle a second mortgage concurrently?

How long until you hear back from their initial review of your documentation?

If the modification is not successful, how much of the fee is refundable and when?

VERY IMPORTANT: How do they define a successful loan modification? Is the bare minimum that they guarantee enough of a savings to actually make the home affordable?

Once they complete an initial review of your documentation, they will move forward by sending your documentation to your lender. Some lenders are offering blanket proposals that are sent out en masse overnight to struggling homeowners, and they simply offer to recapitalize the past due interest, which adds the interest amount to your principal balance and actually increases your monthly payment. Basically, the lender is seeing if you will bite on that offer and start making payments again. There are definitely people out there who are doing good work for homeowners, and if you can’t get a personal referral, at least search for recommendations or warnings about the local person you are dealing with.

Allow me to help you keep or sell your home to stop a potential foreclosure. Contact Eddie Perez at (201) 344-2886,

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2 Comments on “The Truth About Loan Modification”

  1. […] For more interesting information please go to The Truth About Loan Modification. […]

  2. […] For more interesting information please go to The Truth About Loan Modification. […]

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