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Another Loan Mod bites the dust! My New Listing (again!)

By Andrea "Andy" Tolbert

Education & Training with HD Realty BK662006

January 19, 2011 01:47 AM

Another Loan Mod bites the dust! My New Listing (again!)

Back in the summer of 2010 I listed a home. It was a HAFA short sale deal where the bank had already given us the price and approved the seller, I just had to find the buyer.

We got a buyer within the first week, but before the seller could even sign the contract, an attorney contacted her and told her that he would be able to do a loan modification for her and let her keep her house at a payment she could afford. (remember she had already been turned down for a HAMP mod, that's why we were in the HAFA program!).

Well, guess what? Friday I got a call from her, and Monday evening I re-listed her home. Want to know what the attorney was able to get for her?

Her old mortgage payment was $1,650 per month. The Mod that the attorney negotiated? If she sends the bank $3,200 down, they will lower her payment to $1,634. Yes, you read that right. She gives them $3,200 and they will lower her payment by $16 per month. Wow, that's really a help to her budget I bet!

Don't get me wrong... I think that GOOD modifications are a great solution to what we're experiencing in our market, but some of these attorneys are feeding a line of crud to home owners and giving them false hope. How much did this false hope cost her in this case? $2,500 to the attorney!!! They take people's money and tell them "we'll try" and then when they get no results they say "we tried"

Use this example when you're talking to clients and share with them the success rates that you've personally seen clients have with modifications.

Please share with us what success you've seen in people getting loan mods, also, do you know of ANY non-owner occupied homes getting loan mods?

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Michael Ford

San Diego, CA

California+Hawaii+Oregon

i have grown tired of advising folks that the hope of a meaningful loan mod is 5% or less. the hope being held out by the industry verges on pure fraud.

lawyer jokes...why do lawyers wear neckties?

Jan 20, 2011 06:53 AM

Anonymous

Bob Dickinson RE/MAX Excalibur Scottsdale

I am sorry, but loan mods are like the big fish story at cocktail party.

The worst part is that many folks stop paying on their mortgages to be able to "qualify for the loan modification. After several months, when it does not go through, the home owner is faced with having to come up with all the missed payments in one lump sum (usually on an upside down home!) or the bank moves to foreclosure.

Please advise your clients not to waste their time with a loan mod unless they have a competent attorney that can represent them.

Bob Dickinson RE/MAX Excalibur Scottsdale, AZ

Jan 20, 2011 07:10 AM

#45

Deborah Grimaldi

Grimaldi Appraisal Services - Cranston, RI

(401) 837-9633

I have heard of only 1 decent loan mod. from a woman I spoke with at a retail shop. I think the last thing I read was less than 3% actually get a loan mod. Take the money, take the money, get nothing!!!

Jan 20, 2011 07:22 AM

Marte Cliff

Marte Cliff Copywriting - Priest River, ID

Your real estate writer

I could be wrong, but think I just read about a new law that prevents these sharks from taking advantage of people that way. Wish I could remember where I saw that!

All the big hoopla about loan mods was just propaganda... false hope that hurt thousands of people.

Jan 20, 2011 08:18 AM

Anne Richards

Short Sale Buyers and Negotiators - Los Angeles, CA

The Law that post #47 (Marte) refers to is

MARS Part of the 2009 Omnibus Appropriations Act, Public Law 111–8,

MARS means "Mortgage Assistance Relief Service." Find out more at:

http://topshortsalelawyer.com/

Jan 20, 2011 08:37 AM

Anonymous

Michael Singh

Maybe she could pay the attorney $16 a month until she paid the attorneys fee off?

These typ of attorney's are the new ambulance chasers.

Jan 20, 2011 08:52 AM

#49

Kristina Heili

Keller Williams Premier Realty - Woodbury, MN

Comprehensive Real Estate Services

Very sad story, and one that's been told too many times over. I know of a couple that battled with their bank for eight months before they could get a modification, but ultimately they did. For now it's a blessing to them with drastically-reduced monthly payments. After three years, the payments will go up slightly, and then the full payment will again be due in five years. These owners know full well that when that happens, they will be forced to short sale the home. All the dollars they didn't have to pay during the five years will be tacked on at the back end of the mortgage. The home is already upside down by $300,000; it would be a miracle from heaven if their home value increased by that amount in five years!

Jan 20, 2011 09:12 AM

Kathy Sheehan

Bay Equity, LLC 770-634-4021 - Atlanta, GA

Senior Loan Officer

Borrowers need to have that conversation directly with their lender. I have yet to see where an attorney has been able to do anything extraordinary in these situations. Unfortunately, it cost that seller thousands.

Jan 20, 2011 09:15 AM

Elisa Uribe Realtor #01427070

Golden Gate Sotheby's International - Berkeley, CA

Opening the Doors to California Homes -East Bay

What a joke! It's so unfortunate to hear of someone being taken advantage of but sometimes people learn the hard way. One thing for sure, is she knows you are really looking out for her best interest. Good luck on the sale.

Jan 20, 2011 10:12 AM

Simon Mills

Mills Realty - Toluca Lake, CA

In California it is illegal to take upfront money to negotiate a loan modification. The banks unwillingness to renegotiate and let people stay in their homes continues to be mind boggling.

Jan 20, 2011 10:40 AM

Diana Manzato

Highland Village, TX

I haven't heard of 1 loan modification request that was approved with a reasonable temporary decrease. I'm convinced that the lenders would rather foreclose and take the property back as an asset on their balance sheet.

Jan 20, 2011 11:06 AM

Troy Funk

Allison James Estates & Homes, Sarasota 941-957-3737 - Sarasota, FL

Broker / Associate

Andy - I am hearing very few success stories on Loan Modifications. I have learned to stay in touch with homeowners that are in the process of a loan modifcation, because their back up plan is usally to short sale their property and again, it doesnt seem that there are too many Loan Modification Success stories.

Jan 20, 2011 02:39 PM

DeeDee Riley

Lyon Real Estate - El Dorado Hills CA - El Dorado Hills, CA

Realtor - El Dorado Hills & the Surrounding Areas

Andy,

My sister and her husband got a loan mod from Bank of America. Believe me though, it was a nightmare and they actually paid money to a company back east that they lost because she was embarrassed to tell me! They are only paying 2% interest for a couple years. Then it goes to 3 for a year and then 4 for a year. The most it will be is 4.5% I believe for the remaining life of the loan. I was worried there was a trick of some type because it sounded way too good to be true!

Jan 20, 2011 02:44 PM

Victoria CB Trees

Victoria CB Trees Real Estate Services - Chiloquin, OR

Principal Broker

We all ought to book mark this post (the entire thread) to show to any client who asks about getting legal help to do a modification!

Jan 20, 2011 02:57 PM

David Evans

RE/MAX TOWN AND COUNTRY - Cumming, GA

HUD NLB Cumming GA

You so well demonstrate here, how HAFA is most times HAHA! What a joke...

Jan 20, 2011 05:59 PM

Paddy Deighan MBA JD PhD

http://www.medicalandspaconsulting.com - Vail, CO

Paddy Deighan J.D. Ph.D

I established a group for attorneys and real estate professionals and posted two blogs about why loan modifications are failing today and the hypocrisy....it won't solve any problems but it does tell you the :real stories"

Jan 20, 2011 06:10 PM

The Scott Loper Team Bux-Mont Premier Properties

Keller Williams Real Estate - Montgomeryville - Lansdale, PA

Hi Andy,

That is a horrible story, so much aggravation for the homeowner.

Lisa

Jan 20, 2011 11:03 PM

Andrea "Andy" Tolbert

HD Realty - Sanford, FL

Broker, Safety Expert, Instructor

Thanks for all the comments, it just shows that we all have the same frustrations with the system all over the country.

I liked what Victoria said in #57: Keep the post and show it to potential clients!

Everyone keep up the great work and keep helping as many families as you can!

Jan 21, 2011 01:00 AM

Paul Armstrong

Realty Network - Laguna Hills, CA

Serving Orange County & The Long Beach Area

Great post Andy, I think it's illegal in some states - California being one of them - to charge a homeowner a up front fee to do a loan modification. I had a friend here in L.A. that paid an attorney $3,000 to do a loan mod and nothing happened at all! Well guess what - She got that attorney disbarred! That are so many scams to look out for. I'm happy you got the listing and sorry your Client is out $2,500

Jan 21, 2011 10:45 AM

Anonymous

Lorraine Smith

Having been a Real Estate broker/office manager for 7 years, I lost my job in 2008. Since then, I worked part-time in the health industry. Meanwhile, I tried for a modification myself. Citimortgage touted a HAFA program we seemingly "qualified for". Imagine my nervousness at turning my financial information over to unknown goons over the phone with no real specifications for acceptance or rejection. They kept assuring me that we would qualify ---but it would feel like a "walk in the dark". After a few months, our credit scores were ruined since they didn't "apply" our monthly payments in order to make it appear that we were late. Letters came with fees tacked on which we were told to ignore. After our modification contract finally arrived, turns out the payments were going to be 1238 instead of 1760---for 5 months. After that we would owe a balloon payment of $6800! And then the following payment would jump up to $1900. Hmmm, so much for helping homeowners remain in their homes! They told me to "do the Math!" Who are these people? I couldn't believe the guy on the phone thought this was a real deal. I sent a scathing reply---something about get a real job for a company with some integrity. I have a link to articles that tell the real story: the mortgage companies get TARP money for every home they short sale, an amount more than what the value would have been in 2009-- even after paying a pittance to the seller for the move.

Jan 21, 2011 01:17 PM

#63

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