In the past 6 months, there have been a number of articles in this column touching on the subject of the foreclosure process: everything from the default notice (NOD), to loan modifications, short sales and the plethora of scams involving all three. This month’s article will inform the reader as to what is actually occurring in the real estate and loan markets from the perspective of an agent who is working with distressed homeowners on a daily basis.
Many borrowers who default on their mortgages are receiving letters from their lenders purporting to offer to modify their loans. At first, the borrower experiences a ray of hope: maybe the lender will really lower the interest rate on their loan. Reading the fine print, though, often crushes that hope: the letter is merely a conditional offer by the lender to consider a loan modification subject to a review of the borrower’s tax returns and current income statements. Rarely does the review conclude with the borrower receiving the much-needed rate reduction, since the borrower’s financial circumstances have not improved.
Why do lenders make offers they don’t intend to fulfill? Simply this: the Obama administration is requiring the banks to show good faith to homeowners in default by contacting them regarding their loan. In order to receive stimulus money, the banks must collect statistics on how many letters they send to distressed homeowners, but they are not obligated to re-write even one loan.
For this reason, I have yet to meet one so-called loan modification consultant or specialist who has had consistent success modifying borrowers’ loans. These consultants – and that includes the attorneys who have jumped into this business – will only be speaking with the same bank personnel as the homeowner would. You should always ask these consultants four questions:
1. How many loans have they successfully modified?
2. What is their success rate/percent?
3. Will they provide the borrower with three references of local homeowners they
have helped in the past three months?
4. Did they write sub-prime loans prior to entering this new line of work? If they did,
they are part of the problem and none of the solution.
The loan modification field is rife with scams and misrepresentations to such a great extent that California Attorney General Edmund G. Brown has made it a priority for his office to prosecute consultants – and even some attorneys – who do not strictly abide by California’s regulations to operate such a business.
Los Angeles Neighborhod Housing Services (LA NHS) provides free foreclosure mitigation counseling to homeowners. They can be reached by calling (213) 381-2862 or at their website www.lanhs.org.
This article originally appeared in the September 2009 issue of the North Valley Community News.
For more info: California Real Estate Fraud Report
Comments
If anyone has had any luck with any of these companies, could you please post it for the ones that cannot find one to work with you. We've almost lost once and just got a second chance that want last long so I need to get something done now, so if anyone knows the right number to call, i am sure a lot of people that hasn't found them would appreciate it but check out www.obamamortgagerelief.org.
Unfortunately loan modifications wont take place for home owner's who had unethical Brokers or Lenders who falsified the income, assets or employment on the original loan application! The reason is, that you couldn't afford the loan they put you in. They had to falsify everything knowing that the false information wasn't going to go through the normal fraud controls to catch the misleading information. Now they have to input your true income because the U.S. Attorney's office are going after these fraudulent practices. Double check your loan application when you originally applied for the loan and see if your income and assets match your W-2's, check stubs, bank statements or 1099. If they don't, you won't get a modification!!! they would rather take your home and close the loan so as to hide the fact that you were placed in a loan based on false information in violation of federal law and it's punishable by up to 30 years in prison and $1million dollars in fines.
I think this is why it is so important that these homeowners look to work with a good company. I recently called www.MortgageRefinancing.com and they were truthful and had many options for me to choose from.
Consumers... no one is going to look out for you better than you... not the bank... not some non-profit... not some loan mod shoppe... not even a lawyer... if you choose to get help from any company or firm... make sure to do your homework and visit the place... meet the staff... if you cannot meet them... use the Internet... use your friends and their friends to see what you can learn.
- Paul
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