I ran across an excellent blog post on Loan Modification. There is lots of good information as well as links to major banks to learn what the process entails for each instituion. I receive many calls every week regarding loan modification. There are many questions just waiting to be answered.
Hope this shines some light on it for you! Anna Banana
Tuesday after speaking to the City Council about our housing market, several people chased me out as I left the chambers. No, not for the usual reasons, but to share stories and ask about getting help with their housing problems.
One story I still hear way too often in spite of all our efforts to get the word out was a story of fraud. One gentleman lamented that he had sent $2,500 to a Florida company that promised to get his loan modified. Not only has nothing been done in three months, but now they don't even answer the phone there and their website states they no longer do business in California. Nice!
What should he do?
My advice - kiss the $2,500 good-bye and don't send anymore money to scam artists. I did put him in touch with the District Attorney and the Attorney General because how is one individual going to sue a company clear across the country - especially a company that was probably founded on fraudulent grounds and specializes in flim-flam? That he possesses no significant resources and has only a halting command of English doesn't make it any easier for him to proceed and undoubtedly made him a prime target for the unscrupulous. I've also put him in touch with a legitimate counseling service and the HUD website and hope it's not too late for him to recover.
On the flip side, last night I got a call from a good friend of mine on an altogether happier matter - his loan modification had been approved! Honest. I don't know about you but this is the first success story I've heard from the Making Home Affordable program and it was a welcome relief from all the failures experienced by so many. There may be rays of sunshine out there somewhere, folks.
My friend - let's call him John - said he was fed up with the 20 calls and letters he was getting every day offering to refi or modify his loan for a fee - or to make his mortgage go away completely. From being my friend for years he knows all about fraud and only recently came to realize how pervasive it is in the housing industry. He found the onslaught of offers frustrating and very insulting in their blatant attempts to rip him off.
And it's not that John was in imminent danger of losing his home but being self-employed they have seen a substantial decline in their own business the past couple years and are finding that the money runs out before the month does anymore. So they contacted their lender, Chase, on-line and he said the process couldn't have been easier or simpler. They filed the appropriate paperwork on March 8 and this month their monthly mortgage payment will be reduced by over $200 - or about 18%. Granted we're not talking huge numbers here (especially for California) but how many people do you know who would be able to stay in their home with even that amount of relief?
Now over the years John and Betty have been prudent homeowners. They bought their house during the last big drop for about $90,000. After 16 years and two kids, the house needed some updating and repairs so they refi'd in 2007 but only took out the amount they needed for the update. Their current mortgage is about $125,000 though at the time they could have sucked more than $300,000 equity out of the house. They also have the good fortune to have a Fannie/Freddie backed loan, which is not all that common in California - especially after the over-heated run-up the past few years. And they still have positive equity in their home and they are not delinquent in their payments even though they've been paying a $38 late fee for so long it seems like part of the mortgage.
The modification was accomplished through an interest rate adjustment only - the principle and term remain the same. Based on individual circumstances he said there are programs where the principle might be reduced or the term extended to 40 years in combination with an interest rate reduction but those options didn't apply in their case. Their assigned caseworker was personable and almost always answered her phone immediately. She encouraged them to be diligent in their follow-up every week or two, was happy to answer questions and the promise of an answer within 120 days was actually less than 90.
As John pointed out - this is a legitimate program for legitimate people. I know I'm happy as heck for my friends as they do a lot for our community with minimal compensation. It's great to see deserving people get something for a change.
I've sprinkled a variety of company logos throughout this post. If you click on any of them, it'll take you to the company website where the details of their modification program is available. The Making Home Affordable site even has an easy on-line form to see if you might qualify. It couldn't get much simpler. The Help for Homeowners site is currently local to Riverside County, but expanding. This group puts on seminars throughout the region geared to put homeowners in touch with FREE or low-cost LEGITIMATE resources to help refi, modify, short-sale or even lose your home (everybody cannot be helped). This is done with every effort to provide relief, comfort and with as little impact as possible with an eye to future homeownership for those who can't be helped right now.
There are resources available. Remember - if the deal sounds too good to be true, it probably is. If they ask for money up front - it's probably a scam. Also be aware of 'affinity' fraud. Your own ethnic group will prey on you before others. Your church group, your workplace (nurses, teachers) are all more likely to be victimized by an inside job - somebody you may know and trust.
If you're in trouble, start with YOUR OWN bank first. Be patient, be persistent and be professional. If they can help you they PROBABLY will. Banks don't always seem to operate rationally or in their own best interest (or yours) but as John & Betty can tell you - sometimes it works just right and sometimes you win the lotto. Good Luck.