Options in Loan Modifications
One of the most disheartening realities about any kind of major crisis is the inevitable emergence of opportunists who come out of the woodwork, ready to capitalize on the misfortune of others without offering anything that actually improves the situation. The current mess of the housing market is certainly no exception.
With so many people desperate to keep their homes, there are a lot of unqualified shysters who are preying on the confusion and fear. What makes this particularly unfortunate is that they are preying on the very people who, being under such dire circumstances, very well may need professional help in order to save their home. But with so many unqualified scam artists out to make an easy buck, many homeowners are understandably wary about whom to choose to help them or about paying anyone to help modify or negotiate their loans. This is unfortunate because the right kind of professional support can be particularly beneficial to many people struggling with their mortgage payments.
When homeowners attempt to negotiate with lenders on their own behalf, they are almost never as effective as a professional. This is because there are complexities involved in the loan modification process and approval that can be difficult for the average homeowner to understand. Since they are set up to be confusing, these nuances inherently benefit the lenders. The homeowner has to convincingly present a delicate notion to the lender: that they can’t pay the loan at the rate it is set at, but can pay if it is modified.
The statistics of where the country is currently at with respect to foreclosures and loan modifications are pretty scary –
• 340,149 U.S. Foreclosures in July - 32% increase over July 2008 - 1 in every 355 homes
• 87,000 homes were REPOSSESSED by banks in JULY, 2009 ALONE
• 79,000 homes REPOSSESSED in June, 2009
• Of 2.7 MILLION eligible homeowners - only 400,000 loan modification have been offered
• 235,000 homeowners are currently enrolled in the MHA/Forbearance program
What Can You Expect From a Loan Modification?
If your situation merits and your lender agrees, you may see an adjustable rate loan to be turned into a fixed rate loan either for a fixed amount time or for the life of the loan, first and second mortgages combined, and/or interest rates dropped. You may also see any missed payments recapitalized into the loan, so that you do not have to cure the arrears. It is unlikely that your loan balance will be lowered – but I have seen that happen in a unique circumstance. A one percent drop in the interest rate lowers your payment by approximately $100 monthly for each $100,000.00 of debt.
How Do You Avoid the Scam Artists? How Do You know if Your Negotiator is Legitimate? Should You Use a Free Service?
First and foremost, The BEST way to judge the integrity of the negotiator is to ASK QUESTIONS! The more, the better. If they don't have answers (logical answers) or if they double-talk their way through things, if you don’t understand what they are saying, you should be wary. Anyone in the Foreclosure Rescue business who knows what they're doing will gladly be able to OUTLINE the Mitigation/Resolution PROCESS in detail for you before asking you to make a decision.
* Any company who pressures you or asks for your commitment after only one conversation, should be looked at more closely.
* Grandiose pictures and promises are not part of the Consultative Process of the Homeowner's Evaluation Dialog. You should not expect your negotiator to guarantee a result.
* Ask the company how may resolutions they have effected and to give you the before and after details of each of their examples.
* Once you've discussed your particular situation, ask the representative if they’ve worked on cases like yours and to detail them for you.
* Ask for references! If they're that good, I'm sure people would be happy to sing their praises.
The government has a list of companies that have been certified to provide loan modification services for free. I have not investigated these services; there are too many to do so. I don’t know whether they are good, bad or indifferent. I know the kind of service I offer clients, so I can suggest the questions you should ask the negotiator to determine whether “free” is worth it.
• How long will they stay with the process? How do they determine whether the modification offered is worth taking? If it’s not worth taking, will they continue to work on the file to get the modification they think you should have?
• What happens if nothing happens? How diligent will they be on follow through? Will they escalate the process if they are not getting an answer? Do they know how to escalate the process and to whom?
• What counseling do they require of you to assure that you will stand a chance of success?
• How involved do you need to be in the process? Will this become your life’s work or will you be able to focus on earning a living? How much time will your involvement take?
A good negotiator brings knowledge of how the lender’s system works, the right words to use, the time frame you should work within, and who you need to be dealing with. If you’re working with the right person, this can save you a lot of time and money, but because of the climate surrounding the Real Estate market, there is an influx of people who claim to offer these services who aren’t qualified to do so and ask you to pay for their bad service. While this is certainly reason to be wary and cautious, it shouldn’t stop you from exploring the option of hiring a qualified professional to negotiate for you – just do your homework and be thorough. In the long run, getting the best modification possible can far outweigh the cost of hiring a negotiator. On the other hand, if you go for a free service, you may just get what you pay for.
© Copyright Erica Crohn Minchella, 2009
With so many people desperate to keep their homes, there are a lot of unqualified shysters who are preying on the confusion and fear. What makes this particularly unfortunate is that they are preying on the very people who, being under such dire circumstances, very well may need professional help in order to save their home. But with so many unqualified scam artists out to make an easy buck, many homeowners are understandably wary about whom to choose to help them or about paying anyone to help modify or negotiate their loans. This is unfortunate because the right kind of professional support can be particularly beneficial to many people struggling with their mortgage payments.
When homeowners attempt to negotiate with lenders on their own behalf, they are almost never as effective as a professional. This is because there are complexities involved in the loan modification process and approval that can be difficult for the average homeowner to understand. Since they are set up to be confusing, these nuances inherently benefit the lenders. The homeowner has to convincingly present a delicate notion to the lender: that they can’t pay the loan at the rate it is set at, but can pay if it is modified.
The statistics of where the country is currently at with respect to foreclosures and loan modifications are pretty scary –
• 340,149 U.S. Foreclosures in July - 32% increase over July 2008 - 1 in every 355 homes
• 87,000 homes were REPOSSESSED by banks in JULY, 2009 ALONE
• 79,000 homes REPOSSESSED in June, 2009
• Of 2.7 MILLION eligible homeowners - only 400,000 loan modification have been offered
• 235,000 homeowners are currently enrolled in the MHA/Forbearance program
What Can You Expect From a Loan Modification?
If your situation merits and your lender agrees, you may see an adjustable rate loan to be turned into a fixed rate loan either for a fixed amount time or for the life of the loan, first and second mortgages combined, and/or interest rates dropped. You may also see any missed payments recapitalized into the loan, so that you do not have to cure the arrears. It is unlikely that your loan balance will be lowered – but I have seen that happen in a unique circumstance. A one percent drop in the interest rate lowers your payment by approximately $100 monthly for each $100,000.00 of debt.
How Do You Avoid the Scam Artists? How Do You know if Your Negotiator is Legitimate? Should You Use a Free Service?
First and foremost, The BEST way to judge the integrity of the negotiator is to ASK QUESTIONS! The more, the better. If they don't have answers (logical answers) or if they double-talk their way through things, if you don’t understand what they are saying, you should be wary. Anyone in the Foreclosure Rescue business who knows what they're doing will gladly be able to OUTLINE the Mitigation/Resolution PROCESS in detail for you before asking you to make a decision.
* Any company who pressures you or asks for your commitment after only one conversation, should be looked at more closely.
* Grandiose pictures and promises are not part of the Consultative Process of the Homeowner's Evaluation Dialog. You should not expect your negotiator to guarantee a result.
* Ask the company how may resolutions they have effected and to give you the before and after details of each of their examples.
* Once you've discussed your particular situation, ask the representative if they’ve worked on cases like yours and to detail them for you.
* Ask for references! If they're that good, I'm sure people would be happy to sing their praises.
The government has a list of companies that have been certified to provide loan modification services for free. I have not investigated these services; there are too many to do so. I don’t know whether they are good, bad or indifferent. I know the kind of service I offer clients, so I can suggest the questions you should ask the negotiator to determine whether “free” is worth it.
• How long will they stay with the process? How do they determine whether the modification offered is worth taking? If it’s not worth taking, will they continue to work on the file to get the modification they think you should have?
• What happens if nothing happens? How diligent will they be on follow through? Will they escalate the process if they are not getting an answer? Do they know how to escalate the process and to whom?
• What counseling do they require of you to assure that you will stand a chance of success?
• How involved do you need to be in the process? Will this become your life’s work or will you be able to focus on earning a living? How much time will your involvement take?
A good negotiator brings knowledge of how the lender’s system works, the right words to use, the time frame you should work within, and who you need to be dealing with. If you’re working with the right person, this can save you a lot of time and money, but because of the climate surrounding the Real Estate market, there is an influx of people who claim to offer these services who aren’t qualified to do so and ask you to pay for their bad service. While this is certainly reason to be wary and cautious, it shouldn’t stop you from exploring the option of hiring a qualified professional to negotiate for you – just do your homework and be thorough. In the long run, getting the best modification possible can far outweigh the cost of hiring a negotiator. On the other hand, if you go for a free service, you may just get what you pay for.
© Copyright Erica Crohn Minchella, 2009
posted by Erica Minchella at
9:35 AM
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