Len Harley's feature on Mod Scams is timely: I have been researching the issue and found 4 solutions that work for folks who are underwater and do not qualify for the Fannie/Freddie brand of Loan Modification.
1. The borrower negotiates directly themselves. After all your promissory note is a contractual agreement between two parties. Problem here is lenders strong-arm you and make you feel like a criminal for asking. (By the way, that's what happens if you call Hope Now the HUD hot line...they prequal and just turn you over to your lender to fend for yourself with little results to date)
2. Hire a modification specialist attorney. A real one who knows both real estate and mortgage law.... expect 6 months to a year and cost $10K or more. In really complicated cases I know it works and the results can be amazing if you have the right person actually on your team. Forget prepaid legal. They are about as skilled as the collection agencies. If there is any sniff of fraud on your loan this is the best way to go because the lender is legally responsible for underwriting your mortgage to RESPA and they are very afraid of being found in violation.
3. Find a bonafide loan modification company: In Washington state there are a handful who have been successfully modifying loans for about a year under the watchful eye of our very engaged Attorney General, Rob McKenna. Expect to pay a $750 deposit on phase one ($750 due at completion with refund of all but $300 if not successful) our SAG and Dept of Financial Institutions worked on this together and 20 states to follow as outlined in their new bill/law just released this month. OH, and loan modification people must be licensed loan officers or brokers who are both bonded and insured and put your deposit in an escrow account or trust fund. Expect to be engaged in the process and for it to take 60-90 days minimum. (I know folks who have benefitted from this approach because its based on what they can actually afford to pay.)
4. Get a BK specialisty attorney to advise if Chapter 7 or a combination of 7 and Chapter 13 will help you save your home. You must be able to handle a reduced mortgage for at least a couple of years or more...during which time your equity and your credit might start to recover.
The BEST PART of the Obama Rescue Home Affordable Plan is that is has brought the concept of Loan Modification out of the dark closets and back alleys. Follks are getting results. The fog is lifting. AND for those who are wondering...these options are not limited to primary residences. Ask yourself why a lender would not want to modify an investment or commercial property? If anything it's even more likely that an overburdened investor would walk away from a rental first and save their home...you get the picture. My motto: "If you don't ask you don't get...so ASK!"
All the Best! EQUITY TALKS
510-MB-24707-50145 An approved Conventional, FHA/VA/USRDA and Reverse Mortgage Broker
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