26 Comments

  • Loan modifications are definitely needed in this market.

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  • More than ever!

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  • Thank you very much, Kevin, for this helpful article. Indeed, our office is seeing a recent spike in inquiries regarding loan modification programs from borrowers looking for a solution to their mortgage problems.

    It’s amazing how many people facing foreclosure have never contacted their lenders to try to work out a solution. That should be the first step.

    Borrowers can also call the Washingotn State Homeownership Information Hotline at 1-877-894-HOME (4663) or visit http://www.homeownership.wa.gov to find HUD-approved housing counselors.

    Additional resources are listed on our Web site at http://www.atg.wa.gov/foreclosure.aspx.

    Sincerely,

    Kristin Alexander
    Media Relations Manager – Consumer Protection
    Washington Attorney General’s Office

    Reply
  • Homeowners should ask themselves if an attorney is actually working on their case and since its illegal for any attorney to guarantee the outcome of any case, how is it that everyone throws the word guarantee around? (Most likely NOT being said by attorneys, rather those who haven’t a clue of what they’re doing.) More likely they’re NOT involved with an attorney and they use that word to falsely assure the homeowner that their hard earned money will be returned. TIP: Attorneys do not have “money back guarantees.”

    Why not deal with experienced professionals from the very start? An expert will know if the consumer even has a shot at success. Experienced mortgage bankers with underwriting backgrounds are the only way upfront, that you can ever know if your loan will be approved…the same if true for loan modification. Don’t just believe that some intake interviewer will know this. All that persons job is is to gather data, your check and turn your file in to someone who is supposed to be able to determine your chances…the person you initially speak with should be highly qualified to do this and not raise your hope or delay your answer.

    http://www.FederalHomeLoanMods.com

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  • Kevin,

    I went on to the HUD site and looked through some of the supposedly “free” credit counseling sites here in King County. It appears to me as I search their site that they are not specifically offering “loan modification” services. I wonder if they really are experienced at performing them. I also wonder if they can really negotiate a great deal for the client.

    I’ve been considering getting into the business of providing loan modification services at a reasonable price with the firm consideration to help the people that need this help before going to foreclosure or bankruptcy. I cannot perform the service for free, but I can perform the service reasonably and honestly.

    Unfortunately as I peruse the web it appears that people getting into this business have not taken that approach and the whole business is considered poorly.

    This is certainly a business that will only last a short period of time, but I wonder if it is possible to attain a good name and be considered reputable within that short period of time.

    Your thoughts?

    Steve

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  • Dear Louie,

    Thank you for your response. I do agree that attorneys are not any more “qualified” to specifically do loan modification than anybody else. This also rings true with short sale negotiations. Loan modifications and short sale negotiations are a completely different ball game and require a certain level of expertise and real life experience.

    With that said, my decision to endorse licensed attorneys and HUD approved agencies is based entirely on the general requirements necessary to fulfill these types of roles. Attorneys are trained to adhere to law, while HUD agencies are essentially produced by law makers. Because of their intrinsic involvement in our legal system, it’s only reasonable to assume that the likelihood of being scammed by either party would be slim.  While the agencies are already trained in modifying loans, attorneys will more likely be able to grasp and understand the logistics behind loan mods than say, your average joe who’s simply “looking for a new job” (not that everybody in the loan mod business is this way). 

    I am not claiming that loan modification companies scam their customers. I do, however, oppose any loan modification company that charges non-refundable, up front fees without reasonable cause. One must consider the amount of money that is being poured into the creation of mortgage counseling agencies and the sheer effort put forth by all level of government to ensure that this service is available at no cost to the homeowner.

    At the end of the day, however, homeowners will always have the right to pay for convenience. I know some homeowners who would rather not take the initiative or due to language barriers or a lack of patience, would rather pay somebody else to do everything from A to Z. Personally, I think they should do all they can to work with their lenders or a HUD agency and use the money they do have on basic necessities (given that they are truly in distress).

    Dear Steve,

    Everytime a homeowner contacts me about a possible short sale, I’ll always make sure that they’ve at least explored the option of doing a loan modification. I do this to make sure that the homeowner is making the best financial decision when working with me on a short sale. I’ve never made money having a homeowner do a loan mod. In the same way, I believe that as long as there is full disclosure as to what you are providing, and homeowners are fully aware that there are free agencies but are paying you for the convenience, you will build a stellar reputation and you should have no problems meshing well with the distressed home consultant community. It’s better for them to pay for a loan mod than to do nothing at all.

    Good luck!

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  • I’m in a similar spot as Steve above: I’m an attorney who would like to help some people stay in their homes via loan modifications, and I don’t want to do it in a predatory or unethical way.

    My question: is there a way for me to work with a loan originator that doesn’t raise serious issues about fee-splitting? (Specifically, the ethical bar on attorneys sharing fees with non-attorneys). I’d like to work with a mortgage company (have one in mind, exclusive relationship) that has more experience with the mortgages and debtors themselves, and they’d like to use an attorney to do the legal work required. Neither of us wants to scam desperate homeowners; we just want to put licensed professionals where they’re needed. Although it is unclear to me, it seems that the practice of law is involved in some of these loan mods (threatening the provider with litigation based on Truth in Lending violations, etc), and thus they require an attorney. However, even an in-house attorney at a mortgage co. working exclusively on loan mods seems awfully close to prohibited fee sharing. Thoughts?

    I always err on the side of full client disclosure — same story here.

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  • Hey Steve,

    Thank you for your response.

    I recommend contacting the ABA, DFI (Department of Financial Institution) and HUD for an answer to your question. You should probably submit to them in writing the proposed fee structure for both the LMO’s and yourelf, along with a detailed description of the services you would be providing.

    You intend on providing legal aid for the homeowner. Thus, it would be illegal to split those fees with an LMO. If you are using this company to generate loan mod leads, those leads would have to be free for it not to be a RESPA violation. Even if you were in-house, I still don’t see how you could circumvent “fee-splitting.” Loan mod companies generate revenue from fees, so I don’t see how this company could compensate you without finding some way to profit from YOUR legal fees.

    Have you looked into starting your own loan mod business? I don’t see why you couldn’t hire & train loan mod experts to do these on their own. Obviously you would have to place limitations on your involvement with each case. As far as collaborating with an existing loan modification company, I just don’t see a viable business partnership there.

    The owner of http://www.optionnext.com (for profit loan mod co) is an attorney. His name is Alex Paykin. I’m willing to bet that he’s very familiar with all of the set boundaries for the attorney involved in the loan mod business. Perhaps you should try contacting him as well

    Good luck!

    Kevin

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  • We were recentlly robocalled frrom aria and associates down in Irvine CA. Can they do a loan modification in Washington State if they are located in Irvine, CA? We have been on the verge of paying them $1500+ as they claim they can negotiate with our mortgage company and get a fixed rate at 30% lower per month or ‘our money back guaranteed.’ Then their contract actually states they will keep 30% if they refund…hmmm. It gets better. You have 10 days to request a refund….Then I saw in this article: http://www.rockymountainnews.com/news/2008/dec/24/loan-modification-firms-causing-more-problems/ , they are on a list of companies being subpoenaed (sic) by the Colorado State Attorney General. So, after reading this article I reached up to feel my pate…..yup…scalp is still there……at least for now.

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  • MMC,

    I am happy that you did not end up paying that retainer fee. It is absolutely unnecessary.

    Have you looked into contacting any HUD agencies regarding your loan mod?

    I am lots of references, from non-profit to for-profit companies who can help you with your loan modification, so please email or call me if you have any questions.

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  • I am one of those homeowners that has considered a loan modification. Up until a month after I was laid off from my job, I was making my payments faithfully, on time, every month. Never late.

    Now that I have to figure where my next meal is coming from, I have done some research on some of these agencies.

    1. It is true, no one appears to understand what they are doing. Whether it is HUD, Hope, many of these loan modification companies are full of some of the ex-underwriters that recently were laid off during the crises with WAMU, Wells Fargo, or they come from the biggest losers in mortgage banking, Countrywide.

    2. Countrywide – why that company is still in existence is beyond comprehension. I hope that as attorney general you seriously take a look at that company. At the time I had called to forewarn them I was going to be laid off and could they work with me, I was old “you could look for a job.” Between speaking to someone in India that has to go through a checklist to see if you are eligible for a modification to the brain-dead serviceers that tell you the investors won’t be happy if you go delinquent. ofAmerica is probably dreading the day they actually make the takeover permanent. Many of the companies that offer loan modificationshve said thatthings would be better if BofA was in charge.However, BofA is no fool. Why would they takeoer amesss like this?

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  • Evelyn,

    Don’t lose hope! If your local HUD agency has not been able to help you, there are good for-profit loan companies out there who can get the job done. As far as Countrywide, don’t even get me started. 🙂

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  • Thanks! If you could send me a list of agencies that are reputable in this field and can actually be of some assistance, it would be greatly appreciated.

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  • I own a for profit loan modification company. I know it’s hard to believe when I say but I have never taken a loan modification file that didn’t close. I have had 100% success. I do a thorough prequalification using software that I developed. My files are very well prepared and the loan servicers love to work with our company.

    Many of my clients went to the government agencies with no results. In some cases, they actually exacerbate the borrowers position by clouding and confusing the issues. It’s just a matter of time before the truth comes out. They have so many calls and not enough time, resources and experience to handle the client effectively.

    Many loan workouts can be very complicated and time consuming. The average HUD adviser will be in over their head. Many people are hearing from the media not to pay for a loan modification. This is causing trouble for me because after the modification has been successfully completed, many borrowers don’t pay what is rightfully owed to the company that performed the service.

    Is there a middle ground? How can a honest, ethical, and extremely talented loan negotiator get a client to pay after the job is done?

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  • Barry Charles on

    I just happened on to this site by accident. I am not in the loan mod business, but was simply investigating them for my girlfriend. Kkim seems very well meaning, but I think his advice is poor. There is nothing wrong with any company charging for their work, time, energy, leads, expertise, up front. Remember, it was agents, like Kkim, who only charged on the “backend” their 3% commissions (for a service his clients could have gotten assisted by an agency for far less, right Kkim?) into homes that they couldn’t afford and into business with mortgage brokers who were fleecing them.

    You get what you pay for. Always. Last time I looked, my lawyer charged me upfront for services. I was paying for his time and effort.

    If you’re not paying for it — the results are shabby. That’s why Kkim, who suggests going to a Hud backed agency doesn’t himself suggest clients try to sell their own homes with assistance.

    You have to take care. There are always scammers out there. Simply make sure a company is approved by the department of real estate and is working with an attorney with a bar license you can investigate. Then PAY to have somebody actually do something for you, instead of trying to be a cheapskate on your most important asset.

    HUD is a joke. the reason i am looking into this stuff is because of them…When has the government ever done anything right? I am going to suggest to me girlfriend to get a Foresic Loan Audit with an experienced attorney, with an impeccable record, who will actually be negotiating with the bank.

    Any lawyer or company that is NOT charging up front, isn’t doing the work, kids, because then they have to hope that half the deadbeats who aren’t making their home payments will suddenly decide to pay up. Please…

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  • I had help doing asset protection for my bank accounts and pension plan before the short sale and loan modification. I found out about it from a book by steven sears attorney irvine and going to a seminar in 2007. I got help from steven and mike for the tax planning and avoiiding the 1099 cod for cancellation of the debt with the bank.

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  • Hey Barry,

    Sorry to burst your bubble, but not a single one of my homeowners whom I’ve sold a house to are having to a short sale. Banks are responsible for foreclosures. True, agents and (especially) mortgage consultants could have been more careful analyzing their clients financials to ensure that they were purchasing within their means, but the banks were the ones with the programs, the marketing, etc. We’re not the ones that poured millions of dollars in trying to get clients into these loans.

    I must agree that the feedback I’ve been hearing regarding hud agencies are mostly negative. I intend on reporting this to the AGO within this year.

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  • If anybody needs help, I actually work for legit, DRE licensed financial restoration company. Unlike some of those other posts, I am not some guy who just decided to “help” people out my garage. We have three years experience, with zero complaints on the BBB. Feel free to call me and get some real professional and legitimate help at 916-374-7368…..and as far as this article is concerned, since when is anything free ever good? HUD is a bunch of hourly paid, stressed out workers, do you really think they give a damn about getting the best possible deal? Please. Use logic and common sense.

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  • The website is http://www.dyerbeech.com….Feel free to check us out on the BBB and give me a call.

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  • I was wondering if anyone can recommend a good foreclosure lawyer in the Tacoma area, preferably one familiar with forensic auditing. Thanks!

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  • MM Palmer,

    I know an excellent real estate lawyer in Tacoma. Feel free to email me @ kevinkim.email@gmail.com for contact information

    Thanks,

    Kevin

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  • Just to clarify a misconception because I do not want anyone to get any false impressions of me. While I do hold a Juris Doctorate and have a few years of short sales and loan modification experience under my belt, I am NOT A LICENSED ATTORNEY. While I have already passed the bar exams of two jurisdictions (NY and NJ), I am not licensed at the moment. Specifically, I do not have my paperwork in to NJ at all right now, and my NY application is currently undergoing review by the admissions panel… Just to clarify on what Kevin said and so as not to mislead anyone.

    As far as loan mods and short sales go, should anyone have questions, feel free to contact me at apaykin@optionnext.com, and I will either answer you, or if you need legal advice, will pass on the advice of my company’s general counsel (or, if we don’t know the answer here, point you in the direction of someone who does)…

    Good luck to all…

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