Well, you’re in luck, because today I am going to give you the truth about loan modification programs…and what you’ll discover in this article may shock you.

First of all,  let’s clear some of the biggest myths that exist out there in the industry right now. 

1.  You do not need to pay for a loan modification.  You can do a loan modification on your own with your bank if you can speak mortgage terminology, are experienced with negotiations & can present your arguement like an investment consultant (this is not an exaggeration). 

2.  You do not have to be current on your mortgage in order to qualify for a loan mod.  Bank representatives will often tell you that in order to be considered for a loan modification, you have to continue making your payments.  This is absolutely false and quite counter productive. 

3.  Just because you qualify for MHA (HAMP) and/or 2MP does not mean the lender is going to give you a permanent mod.  Often times, homeowners will get “preapproved” for a mod, strung along for 3-12 months just to get nothing more then a temporary reduction in their payments, almost like a mini-ARM.  Did you know that in 2009, out of 1,032,837 MHA trial modifications, only 31,382 became permanent?

4.  MHA, HAMP, HAFA & 2MP are not the only programs available to homeowners, so just because you get rejected to these programs does NOT mean that you CANNOT get a modification.  There are what experts call “internal programs” that are basically private modifications made available by the investor (who owns your mortgage note) on a case by case basis. 

So let’s briefly discuss the two major loan modification programs out there and their requirements:

MHA (Making Homes Affordable):  MHA is widely known as Obama’s Financial Stability Plan and is the birthplace for programs like HAFA (for Deed-In-Lieu & Short Sale Customers) & HAMP (for Loan Modification Customers). 

HAMP (Home Affordable Modification Program) has the following blanket requirements:

1.  Home must be a primary residence

2.  Your mortgage note must be less than 730k

3.  You must be able to document financial distress

4.  You obtained the mortgage before 2009

5.  Your mortgage must exceed 31% of your gross monthly income

6.  The bank must participate in MHA

The reason why I say “blanket” requirements is because most homeowners do not bother to consider the fact that banks are flexible and open to negotiate terms as long as you know what presses their buttons.  For example, you can negotiate a loan modification for rental properties (non primary residences). 

So don’t make the mistake of simply giving up on your loan mod just because you don’t qualify for MHA or HAMP and some customer service agent runs your numbers and tells you that you’re not qualified.  Just because you get rejected for these programs does not mean that you cannot obtain a loan modification.  We will get to this later when we discuss the mysterious “internal loan modification program.”

2MP (2nd Lien Loan Modification Program):  This program requires lenders who participate in HAMP to also offer modifications for 2nd loans.  Now don’t be fooled, this does not mean that lenders are required to offer you a permanent modification at desirable terms.  Rather, they are simply required to make the ”offer,” which is a very big difference.  Here are the following blanket requirements for the 2MP Program:

1.  Same requirements for HAMP

2.  Can’t be subordinate to a 2nd lien, neither can the loan be a HELOC in 1st position

3.  Can’t be on a 2nd loan where no interest is charged and no payments are due until the first lien is paid in full

4.  The loan cannot be insured, guaranteed, or held by a Federal government agency (e.g. FHA, HUD, VA, and Rural Development).

5.  2012 is the current deadline

While this is a great opportunity to further reduce their payments (by modifying their 2nd loans as well), just because one is qualified for 2MP does not mean that a permanent modification will be given.

What most homeowners must understand is that lenders will do anything & everything to keep you from modifying your loan while keeping you current.  While they may be more then happy to offer you a trial modification, converting that trial mod into a permanent mod is a direct result of aggressive negotiations & understanding the banks alternatives in the event of foreclosure (aka their “hot buttons.”)  Before we go into this further, let’s talk about a 3rd and often overlooked program that most homeowners know nothing about.

The Mysterious “Internal” Program

So what is the mysterious ”internal” program?  It is a privately negotiated loan modification where terms are approved or disapproved by the “investor” on a case by case basis.  Who is the investor you ask?  This could range from Freddie Mac, Fannie Mae to some other major lender that you don’t even bank with.

Internal programs are what you want to pursue in the event that you do not “qualify” for MHA/HAMP and/or 2MP.  You may be surprised at how many homeowners are initially rejected from these government-mandated programs.  This is most likely due to the fact that customer service agents will run your numbers in a way that causes there software (yes, literally) to reject your proposal for a loan mod.

Think about it.  Do you really believe that banks are that anxious to permanently lose money on your mortgage?  NO WAY.  Therefore, be wary when you are easily approved for a modification because most likely you may be getting strung along for a temporary modification and not the real thing.

So by now you might be asking, “what are the requirements for an internal modification program with my lender?”  Well, here are some general rules of thumb:

1.  Know exactly what you are doing.  Don’t waste your time trying to adjust your mortgage payments to 2% of your gross monthly income or something ridiculous like that. 

2.  Understand foreclosure law as well as your states position on deficiency judgements before you aggressively negotiate your loan mod.  Before you negotiate terms, make sure you understand your alternatives as well as the banks because if you don’t, your lender could very well foreclose on you & pursue you for a deficiency judgement, causing you to lose your home as well as your sanity for the next 5-10 years.

3.  Be able to speak to your lender like an investment consultant.  Discuss the value of your home, what your property would sell for as an REO or at the auction and remind your bank about the cost of foreclosure or repossessing properties for the purpose of selling as an REO.  You need to be able to frame your proposition in the best light as possible, and you can do so by essentially “down playing” your bank’s alternative choices.

4.  Arrange your finances in a way that does not overestimate your income & underestimate your expenses.  Have a well written hardship letter, be organized and do not give the impression that you do not know what you are doing, since an experienced loss mitigator will smell a “newbie” from a mile away.

5.  If you aren’t capable of fulfilling the above requirements, pay someone else to do it.  With what money you ask?  Well, if you default on your payments for 3-6 months,you should have more then enough money to pay for decently-priced loan modification service.  Spending what you would usually pay on your mortgage to get your interest rate and payment amount reduced permanently is a great deal in my opinion. 

“..Kevin, I want to talk to you about my property and my loan modification.  Do you recommend pursuing one on my own, using a HUD agency or a loan modification company?  I also want to find out whether I qualify for an internal program..”

This seems to be the question of the day.  Let me be clear.  I am a licensed Short Sale expert, not a loan modification consultant.  I personally am not a fan of homeowners doing modifications on their own or with a HUD agency unless they themselves are willing to prepare the package, present an arguement and aggressively negotiate with the lender until they reach a permanent modification with terms that are agreeable to both parties.  A homeowner should expect to easily spend a few hours a week for 3-12 months pursing a modification.

Your goal, when pursuing a loan modification, should be to quickly circumvent a trial modification and get yourself a permanent modification at the expense of the lender.  That is about the simplest way I can explain it.

My personal recommendation is to get expert consultation with a DFI (Department of Financial Institution) approved Loan Modification company with a large track record (at least 100+ success stories) and stellar closing rate.  Talking to an expert will help you avoid wasting your time & energy taking the wrong approach with your bank.  There are about 4-6 major factors as well as 100+ secondary factors that affect your ability to obtain a successful loan mod.  So be smart, get advice.   

So get yourself some help, get your mod and start saving money.  There are more programs available to you then you might think.  You (or your hired agent) simply need to dig deep enough to find them.

Kevin

So many homeowners resort to working with non-profit organizations for assistance on their loan modifications.  While this may work for some, most homeowners will find that they are dissastified with the lack of “hands on” help that such an organizaton can provide.  This is because non-profits are not directly paid for closing loan modifications, so naturally, most of them will not work as hard as someone who is hired to do the job.  In the words of some of our clients, non-profits simpy “don’t show teeth.”  Yet put yourself in their shoes.  If you weren’t getting paid to work really hard on a particular loan mod, well, would you?

I have even had homeowners tell me about how members of non-profit organizations would come over to their house and propose a fee structure for their services (on the side).  Isn’t that messed up?  Now why would members  of a non-profit organization unethically use this medium as a tool to attract PAID clients? 

Probably because they realized HOW HARD it really is to successfully negotiate a loan modification.

Now keep in mind that if you do hire a negotiator, that negotiator must be a licensed mortgage officer to legally negotiate a Washington loan modification.  I believe this is the case for a majority of the US.  I support this requirement 100% as it automatically discourages “scammers” or people “off the street” from attempting to launch their own loan modification businesses at the expense of an unsuspecting homeowner.

So what you should look for when hiring a negotiator?

1.  Licensed Mortgage Officers

2.  At least 100 successfully modified loans

3.  90%+ success rate

Furthermore, in order to make sure that you do not overpay for loan modification services or that you are working with a legitimate company, you need to compare the services of that company with what the Department of Financial Institution states in their interpretive statement, found here:   http://www.dfi.wa.gov/cs/interpretive_statements/mortgage/IS-2009-01.pdf

In summary, do you your research before attempting to negotiate a Washington loan modification and make sure that if you do hire a person or a company, that they meet every single government mandated requirement along with the characteristics that I mentioned above.

I have one company that I personally recommend for loan modifications in all 50 states.  They meet every requirement listed above, have stellar consumer reviews as well as the “OK” from most relevant government officials.  For a free consultation with them, simply click this link now or scroll up to the top of this website and click the “loan mod” tab. 

Kevin

You’re in need of real help, real fast.

So guess what else you’ll find in the mail?

1.  Letters from people claiming that you can walk away by quit-claiming your property to them.  SCAM.

2.  Letters from people claiming that they will delete your mortgage if you give them 50% ownership of your property.  SCAM.

3.  Government style letters claiming to help you obtain ”government loan modifications and/or short sale assistance.”  SOLICITATION FOR BUSINESS.

4.  Investors claiming that they’ll “buy your house” in 7 days.  QUITE POSSIBLY A SCAM.

So you go off searching for “Seattle Foreclosure Help” on Google and you again run into people promising to buy your property from you or “save your home and prevent foreclosure.”

Now not every single company promising to save you from foreclosure is attempting to scam you, but you must keep in mind the key differences between a company that’s going to actually help you vs. a company that’s out there to rip you off.

And you know what that is?

It’s a track record.

Has the company closed at least 75-100 short sales?  What is their average success rate?  Of all of the loan modifications that they’ve negotiated, how many of them have been permanent? Are the companies promising to repair your credit comprised of actual attorneys experienced in litigation or random people off of the streets?

These are questions that you absolutely must be able to answer when seeking to avoid being another Seattle foreclosure statistic.

As the owner of Short Sail Solutions (a nationwide network of short sale experts), I have spent the last few years partnering with the best companies out there with the strongest track records, who are now ready and available to help you avoid foreclosure and walk away from this season in life with as little damage as possible.

We have experts all over the nation designated for the following areas of interest:  Short Sales, Loan Modifications, Credit Repair, Debt Settlement & Legal Counsel.

If you need help, simply scroll to the top of this website and click the tab that best addresses your need.

One free phone call with an expert may quite possibly save you from foreclosure.

And remember, when something sounds to good to be true, it probably is.

There is a reason why the Attorney General wrote me a letter commending my business.  When homeowners are in pre-foreclosure, the last thing they need is another person trying to take advantage of their distressed situation.  Yes it’s important to get help, but it’s even more important to get it from the right people.

Be wise,

Kevin Kim

Click the above link for a live podcast featuring myself & Derek Johnson, the “Mod Reporter.”  In this clip, I discuss the ins and outs of how to determine whether a short sale is truly “in your best interest.” 

Enjoy the clip!

Kevin

I also talk about this in my email reports, so sign up NOW by adding your name & email in the form located on the right side of this website.

Now one thing that I am not going to do is give you legal advice on this blog.  If you want to hire legal advice for more personalized consultation, first of all, do not hire an attorney for $300 an hour.  Use Pre Paid Legal, which gives you unlimited consultation with a top tier attorney in your area for a measly $16 a month.  I use this service myself.  With short sales, rarely will you need physical attorney representation.  Rather, you need consultation, and that comes a lot cheaper.

Plus, Pre Paid Legal attorneys WILL write letters & make phone calls for you, if it is necessary to do so. 

Follow this link to learn more about Pre Paid Legal

Before you even consider a short sale, first ask yourself, do you want to keep the property?  We’re not in the business of forcing people to do short sales if they’re desire is to keep their property.  Have you considered a loan modification? 

If you really want to keep your home, there are plenty of other options to consider.  Did you know that it is possible to file for BK, discharge a large 2nd and modify your first mortgage which would instantly “recreate” equity in your property while leaving you with a significantly lower payments AND a lower mortgage balance then you originally had on the property?  Ask a loan mod expert about this option

Now, in order to negotiate & waive a short sale deficiency, you must have the basic following:

1.  A professional negotiator

2.  A complete short sale package with an offer

3.  Updated financials

If you do not have these basic things, you’re going to run into small, administrative issues that’s going to keep you from talking about what’s most important in a short sale (ie. the deficiency).

Now let’s talk about a couple things you need to understand before attempting to negotiate & waive a short sale deficiency balance.

First, how many mortgages do you have?  If you have only one and you live in a non-judicial foreclosure state, you have the most leverage for negotiating your deficiency balance.  This is because if you allow the property to go into foreclosure, the property will sell for 60 cents on the dollar and the lender will lose all deficiency rights.  Thus, it is in the lender’s interest to simply accept the short sale as payment in full.  Alternatively, if you have a 2nd mortgage, you have less leverage,  since the 2nd lienholder can usually pursue you for the deficiency no matter what.

Now, let’s talk about a couple techniques that I’ve used to personally negotiate 100% waiver of deficiencies or a settlement for less than what is owed:

1.  Financial hardship.  If you are in true financial hardship, you must make this absolutely clear to the lender.  You must convince the lender that it is not worth pursuing you, since you have no assets, and that foreclosure means “little” to you if they are not willing to budge (this will surely scare the 1st, while it might not have so much effect on the 2nd)

2.  Threaten bankruptcy.  If you threaten bankruptcy, (esp. if you send a letter or a BK schedule), lenders will work with you.  In the event of bankruptcy, lenders are at the mercy of the bankruptcy trustee and how they decide to approve the terms of the BK.  If you are in financial hardship with much debt, you will probably be qualified to discharge that debt.  Threaten bankruptcy.  You can get Pre Paid Legal attorneys to write letters and make phones calls to your lender if you want to add serious firepower to your negotiations. 

3.  Have the buyer raise the purchase price.  This is why it is absolutely important that you do not try and haggle buyers for the highest priced offer when you intial do the short sale.  This will only harm you.  Most homeowners are under the impression that the higher the offer, the lesser likelihood that lenders will release the deficiency.  This is not true.  On the contrary, lenders will be more likely to release the deficiency if the purchase price is raised AFTER the lenders are intially given a much lower offer.   

My lender isn’t budging and is not waiving the “deficiency” language and/or is requiring me to sign a promissory note!

In the event that you are running into this issue, it is likely that your missing one of the above steps.  However, I understand that sometimes the lenders will simply not budge.

My opinion (not legal recommendation), is that you release the lien anyways and follow through with the short sale to pay off the 1st (in most cases, a short sale will allow you to at least get the 1st off of your back).  Any remaining debt with the 1st or 2nd, any promissory note or the “right” to pursue a deficiency is nothing more than unsecured debt (like a credit card) for the lender (which they hate), and if you default on that, then the lender is left with the choice of either suing you for the debt, to settle for less than owed or to simply write the debt  off and issue a 1099-c.  Releasing the debt as a tax write-off, by the way, is quite rewarding to the lender and in many cases, the lender will simply write off the debt. 

Once you corner your lender into this situation, it is in your best interest to repeat the above steps (show evidence of hardship, threaten bankruptcy).  Lenders, their creditors or their attorney firms will most likely be open to look at different options, especially if you threaten bankruptcy. 

If you have some cash or can borrow some cash, you can also do “debt settlement” with your lender (as well as with all of your other unsecured debt) and try to settle for 20%-40% of your debt. 

Can’t I just allow my property to go into foreclosure?  Don’t they lose their deficiency rights if I do this?

No.  If you live in a judicial foreclosure state, the lender can still pursue you for the deficiency.  If you live in a non-judicial foreclosure state, the non-foreclosing lender (usually the 2nd) can still pursue you for the deficiency.

OK, so what if I get the deficiency waived or the lender decides to release the debt as a “tax write off”?  Won’t I still owe taxes on the deficiency?

Yes, unless you are qualified for the Mortgage Forgivess Debt Relief Act of 2007.

Now with everything that I’ve mentioned, keep in mind that a professional short sale negotiator is an absolute necessity when dealing with a short sale.  There a billion other things that can go wrong in a short sale, so make sure you hire representation. 

One last concern I want to address:  “My credit is important to me!  How do I improve my credit after a short sale?”

I’m sure you know by now that a short sale will damage your credit, including the 30/60/90 day late payments that show up on your payment history, although a short sale is not as damaging as a foreclosure. 

Well there’s no need to worry.  We’ve recently partned with Lexington Law, an attorney firm that specializes in removing negative items from credit report, NOT based on accuracy (since most negative items are accurate), but on OTHER factors that are just as important. 

Follow this link and ask a Lexington Paralegal about removing short sales, late payments and even foreclosures from your credit report.

I hope that by now, I’ve provided you with enough resources & information necessary to close your short sale, walk away from your property and minimize the damage as much as humanly possible.  You may want to bookmark this blog post and keep it as reference for the future.

I truly wish you the best,

Kevin

My answer to them is, “get the facts and trust your instincts.”

Here are the facts:

Effects of Short Sale on your Credit Report:

• 200-300 point reduction on your FICO score, depending on the borrower.  I have heard of a 100 point reduction, but this should be very uncommon.
• Inability to obtain a mortgage for at least 24 months.

Effects of late payments on Credit Report:

• 30-60 day late payments, if considered an “isolated occurence” (you do not have 30-60 day late payments on multiple accounts), does not cause long term damage to your credit. 
• 90-120+ day late payments, however, do drop your credit score for the long haul (around 7 years).

Effects of Collections (post Short Sale Deficiencies) & Debt Settlement

• Your score from suffer with both, except with debt settlement, you’ll eventually repay your debt and thus helping to rebuild your credit score
• Do not simply leave your debt hanging with collections in hopes that they will charge off the loan.  They will continue to report that you are in default of “installment payments,” etc.  They can do this for years.  It is better to settle your debt and move on.  You especially do not want additional 90 day late payments reported as your credit score at that point will drop significantly. 

Here is my opinion:

Many homeowners end up spending all of their savings and living expenses on their mortgage payments, in the name of “protecting their credit.”  Some are even borrowing money (using lines of credit) to pay back their mortgage.  Little do they know that they are probably not accomplishing what they think they are accomplishing by paying their payments.  Moreover, mortgages are not designed to replace your groceries or gas in your vehicle, and if that is the case, the homeowner either needs to get their loan modified or simply let go of the property (given their situation isn’t a consequence of some unnecessarily large personal expenses, ie. gambling).  The mortgage is not right for them. 

Homeowners must ask themselves, then, is it really worth paying their mortgage if you are already 90+ days late to preserve their credit?  How about if you are current, based on the facts, do you have some wiggle room to reserve money to pay down other expenses? Aren’t you simply paying your banks rent money until you close your short sale?  Are you supposed to be neglecting your daily necessities just to pay your mortgage?  As far as loan modifications, did you know that late payments can be wrapped around the mortgage balance once you start your new payment plan?

Ask yourself, what could you do with a couple months worth of mortgage payments?

I’ve got some answers. 

1.  Pay off your loan mod fees (although our short sale negotiators are paid by the lender, unfortunately loan modifications do not work that way)

2.  Reserve money to pay your debt negotiation specialist who can help negotiate your post short sale deficiencies (becoming much more common), consolidate all of your other unsecured debts (credit cards, medical bill, small loans etc) and repair your credit

3.  Spend it on daily necessities.  Do not sacrifice meals to pay your mortgage because that mortgage (as is) is not right for you. 

Is it smart to spend money on money that has clearly no return on investment?

Is it smart to save money in order to save more money in the long run?

Should you keep paying your mortgage payments?

The answer:  Get the facts and trust your instincts.

It’s incredible..borrowers with bad credit and reduced incomes are obtaining better mortgages though modifying them then even the perfect borrower.

So tell me, would you like YOUR property to be added to our list of loan modification success stories? 

BELOW are examples of what our experts have been able to do for our clients with respect to their loan modifications.

Case #1

This client went from 11.25% to 5.625% and saved $1082 a month, making this deal a shorter break even than any refinance could have done.

Case #2

This client came to us 18 days prior to the sale of his home. We worked with his lenders to save his house and modify his loan from 11.25% to 4.875%, saving him almost $2,000 a month!

Case #3

This client went from being 4 months behind at 7% to being current with a 5 year ARM, saving more than $1,700/month.

Case #4

This client went from being 2 months behind at 10.25% to being current at 4.85%, saving her more than $1,300 a month.

Case #5

This client went from being 11 months behind after her ARM adjusted to 10.875%, to being current with a new 2 year ARM at 3.875%. Her monthly mortgage payments are now a third of the original amount.

Case #6

This client fell behind on mortgage payments on a house he has lived in for 19 years. We worked with his lenders to lower his rate from 8.5% to 1.75% for five years, saving him over $1,700 a month.

Case #7

This client saved $773 a month and his lenders brought him current on his property taxes.

Case #8

This clients’ loan was modified from a 40 year fixed 10% loan to a 10 year interest-only loan starting at 3.625%. The clients saved over $2,000 a month from modifying this loan!

So what’s the secret?

Quite frankly, the secret to our loan modification success stories is our negotiators.  Our negotiators are veterans in the mortgage industry who have direct relationships with the Vice Presidents, directors, etc. of the very banks that you are struggling with.  They also understand the following:

1.  How to skip past customer service and go directly to the decision-makers

2.  How to negotiate an “internal” loan modification as opposed to an “external” mod (ie. Obama plan)

3.  How to use legal loopholes and consequences as leverage to negotiate (and sometimes threaten) lenders into cooperating with you

4.  How to structure your financial package for optimium success (people have no clue how to prepare the package correctly)

Would you like more details on these success stories and the secrets to obtaining them?  If you are seeking similar results with your mortgage, I highly recommend contacting our experts to discuss your loan modification.

Kevin

Everybody should watch this documentary to understand the dynamics of short sale, loan modification and debt negotiations.  This documentary outlines different types of fraud committed by lenders that have led millions and millions of homeowners into short sales, foreclosures and unmanageable debt.  

As a short sale expert who deals with clients everyday, trust me, I have seen and heard it all:  Homeowners crying on the phone when sharing their hardships, other clients even going as far as taking their own lives after losing all of their equity in their business.  People need to realize that a majority of the mortage fraud committed during the “peak” were not committed by homeowners or investors, but the actual lenders and/or their personnel.  No doc and stated income loans, lender-influenced appraisals, ARMs sold on speculated market appreciation, etc.  These were lenders, not the homeowners, who originated such bad loans. 

These lenders, my friends, are the primary reason why you’re struggling with a short sale.  This is precisely why you are having to deal with a loan modification. 

And now, rather than spending their bailout money on bailing out their customers with grossly over financed properties and terrible loans, lenders are now forcing homeowners to pay for these properties (in the form of deficiency payments and/or judgments) even when homeowner can’t afford it.  Thus, by using the old scare tactic and threatening to foreclose, even if homeowners and agents are doing their best in getting banks fair market value for their property, the bank’s “thank you letter” for your efforts happen to be nothing more than, in effect, “we are going to hunt you down for every last penny for this mortgage regardless of whether you can afford it or not.” 

How lenders are dealing with homeowners could be compared to a man teaching a child how to open a lemon stand, supplying the child with rotton lemons, then when the child is out of business, kicking the child while their on the ground in an attempt to steal the child’s wallet. 

So this is why I am in this business.  I am in this business to advocate for you, the consumer, and to fight back on your behalf.  My desire is to take that man, threaten to call the police, and force him to give back your wallet. 

It is amazing how unaware homeowners are when dealing with lenders.  Somehow, they are “duped” into believing that lenders are providing short sales and loan modifications at terms that are in the homeowners best interest, when in reality, they are almost always looking out for their own interest. 

Don’t let these lenders and creditors kick you while you’re down.  Have someone fight on your behalf.  Get help now.  We understand what lenders are willing/unwilling to do in these situations.  We know their hot buttons.  Don’t give these lenders your money, rather, save it.  You’ve earned it through hard work and thus we will fight as much as humanly possible to ensure that it is yours to keep. 

Don’t be “duped” into yet another “fast one” with the bank.  Get help now. 

 

*NEW UPDATE - CHECK OUT SOME OF OUR LOAN MOD SUCCESS STORIES*

It’s been almost a year since my last post regarding Seattle loan modifications.  Get ready for a new perspective. 

In the last 11 months, I’ve realized that many, many homeowners out there simply do not have the capacity to negotiate their own loan modifications.  Here is why:

1.  They do not find HUD agencies helpful (not to say that they aren’t, but many homeowners have had this complaint)

2.  They are under too much stress and end up arguing with HUD or loss mitigation (thus ruining their chances of successfully negotiating a loan mod)

3.  They do not have the time to negotiate their own mods and end up going back and forth with lenders for many months.

Many of these homeowners end up turning to short sale, only to realize a couple days before the sale that they could have qualified for a loan modification.  Better yet, they may have been qualified for rates better than what was originally offered. 

One thing homeowners must realize is that lenders are NOT NEGOTIATING IN YOUR BEST INTEREST.  IT IS NOT IN THE LENDERS INTEREST TO GIVE YOU THE BEST TERMS FOR YOUR MODIFICATION, BUT RATHER, THEY WILL PROBABLY BEGIN WITH THE WORST.

Moreover, lenders will do the following to “encourage” (scare) homeowners into coughing up as much money as possible:

1.  Requiring the homeowner to pay their arrears in full before pursuing a loan mod (this is not a requirement for most lenders and is often a flat out lie)

2.  Offering very short term loan modifications (often they are just forbearance agreements)

3.  “Hard balling” in their communication with the homeowner (being unresponsive or evasive).

After seeing countless complaints, failed loan mods (even those that were negotiated by ATTORNEYS) & other horror stories with seller-negotiated loan modifications, I decided to search for a SOLUTION. 

I spent many months carrying out my due diligence in search of legitimate, for profit loan modification companies.  I contacted the Department of Financial Institution and even spoke with Cindy Fazio (DFI Staff Attorney) regarding their opinion on certain loan modification practices (The Department of Financial Institution is the very institution that regulates what for-profit loan modification companies can and cannot do in Washington State).  I studied the interpretive statement released by the DFI addressing everything from how much a loan modification company can charge up front to how they are to bill for their services and what those services must entail.  I found that the DFI too has found the legitimate demand for for-profit loan modification companies and that I wasn`t alone in my struggle with how to help these kinds of homeowners.  Our very own DFI understands this need! 

After months of researching, interviewing and investigating different companies, I finally found a mortgage company with a loan modification division that can do the job.  They now process all loan modifications brought in by Short Sail Solutions.   Here is why I trust them with my clients:

1.  Their pricing is based directly off DFI recommendations, in other words, they charge whatever price that was recommended by the Director & Staff Attorney of the Department of Financial Institutions. 

2.  They have a powerful track record of successful loan modifications with virtually no consumer complaints.

3.  They are all licensed mortgage officers (DFI requirement)

4.  Should a homeowner decided not to move forward with a loan modification prior to negotiations, they will return the upfront fee and retain only a $75 research fee.  The upfront fee is deposited in a trust account, to be released only upon completion of the phase.  This is important, since loan mod scam artists will often collect an upfront fee and simply run away with it. 

Here is a link to the DFI interpretive statement that I am referring to:

http://www.dfi.wa.gov/CS/interpretive_statements/mortgage/IS-2009-01.pdf

If you are not sure whether a short sale is right for you and would keep your home if the mortgage was more affordable, it is absolutely imperative that you first explore the loan modification route.  Do not short sell your home if it`s not in your best interest!  A loan modification will not damage your credit, unlike short sales.  It is extremely important to make sure that you`ve eliminated all other options before pursuing the short sale. 

KEEP IN MIND THAT A SOLID FOR PROFIT LOAN MODIFICATION CAN NEGOTIATE INTEREST RATE REDUCTIONS FOR THE ENTIRE LIFE OF THE LOAN.  Loan modifications should NOT ALWAYS BE SHORT TERM.  Our partners have done everything from 5 year arms at an extremely low rate (rates do not revert back to original rate, but according to LIBOR) to 30 year fixed. 

Click this link to obtain immediate, professional consultation regarding your loan mod.  Make sure you read the disclaimer; Homeowners can often figure out whether they are candidates for a loan modification based on the disclaimer alone. 

If you are an agent, I highly recommend having your homeowners pre-screen for a loan modification before pursuing a short sale (that is, if the homeowner has expressed interest in keeping their home).  It is a grand waste of time for everybody involved if the homeowner is qualified for a loan modification and ends up realizing that only a few days before the closing date on your short sale.

Take advantage of the resources around you and do something about your situation.  Continuing to miss payments without a plan of attack is a perfect recipe for a foreclosure.  If you do not have the time, resources and the general capacity to negotiate your own loan modifications, then work with professionals who can.  It is never good to simply allow your property to go into foreclosure. 

Again, click this link for immediate assistance regarding your loan modification.

Thus concludes my take on for profit loan modification companies.    

Questions to think about:

Are you having trouble with any particular lender?  If so, who and why?

Is the lender not accepting your short sale even if you believe it is full price? 

Are lenders giving you the “run around” with their loss mitigation department?  Are you having a hard time reaching somebody who can help you? 

Have your local HUD agencies been helpful assisting you with your loan modification?

Have you had any bad experiences with non-profit/for-profit loan companies?  Bad experiences with short sale agents or negotiators?   

Are you having a hard time holding onto buyers for 3-4 months until short sale approval?  What have your been experiences been like with the lender once they know the buyer is off the table?

Is the lender being frustratingly persistent about charging your homeowner with a deficiency judgement or note for the difference between your sales price and the loan amount? 

Just some questions to get you thinking.  Post away!