The numbers are out: the latest industry statistics reflect that approximately fifty percent of all loan modifications will fail.
The numbers are no surprise. The term "loan modification" has become the catch all name for any repayment plan, sort of like referring to a tissue as Kleenex. Despite the bail outs and all the hype in the news about the banks working with homeowners the sad truth is that lenders remain as greedy as ever and homeowners are losing their homes at a record setting pace.
A few months ago there was a lot of talk about principal reductions to help homeowners keep their homes. Every lender that I've talked to in the last 60 days when asked about possible principal reductions, all have the same answer: ‘No'.
Sooner or later, these toxic mortgages will have to go away either by modification or termination (foreclosure). Loans must be modified to reflect today's value in conjunction with the borrower's ability to pay. Where is the value of a rate reduction when it is not commensurate with the borrower's ability to pay?
Example: a homeowner from West Palm Beach called a few weeks ago who was seeking help negotiating a loan modification with her lender. She has a decent job with good potential for continued employment. However she does earn less now and there is only one paycheck to support the household, not two like when she got the loan.
It was also determined that she is upside down in the house by at least $80,000, maybe more. Although her mortgage debt far exceeds the value of her home she insists she wants a loan modification. In her words, ‘I love my house'. That is emotion talking, not logic and certainly not good business.
IF her lender agreed to a repayment plan (aka loan modification) with monthly payments that she could afford; it is likely this loan modification would eventually fall in the bucket of defaulted loan modifications. Why? Because sooner or later this homeowner will realize that she is doing nothing but putting off the inevitable: losing the house.
For thousands of other homeowners though, loan modifications DO work -
the modification just has to be structured realistically and be a permanent solution - not a temporary fix. Not all homes are upside down and sometimes a payment adjustment coupled with money management counseling is all that is needed.
We can only hope that this latest release of industry statistics touting a 50% fall out rate of loan modifications doesn't wind up as just another excuse for lenders to avoid working with homeowners to keep them in their home.
;)
;)
I work as an application taker for a reputable loan modification company. I fee the key to making a good loan mod work is finding a good company. If you were to go to a company like mine for instance where only files that we know can be fixed are excepted, and where charges that are retained are refundable. Finding a good company may be the real challenge here! You need to look for a company that has in-house attorneys that have been in loss midigation and or real estate litigation as a practice for many years, this way there is already a fundimental relationship basis with all of the lenders currently out there. Don't over pay, for many people a good loan mod is worth a lot and that can be realized when time to pay up, if a company is charging you several thousands of dollars instead of lets say a flat fee of only a couple, you may be paying off thier mortgages in the mean time. For a reputable company who plays by the rules, and gets done what they say they can contact us at www.helpmodifynow.com or email me directly at janderson@helpmodifynow.com and ill be glad to help you apply.