LOAN MODIFICATION COMPANIES - New Business Model or Risky Scam? Chapter 3. Resources For Home Owners In Need of Loan Modification Advice.

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Home Builder with CREST BACKYARD HOMES, ON THE LEVEL GENERAL & FACTORY BUILT HOME CONTRACTOR, TAG REAL ESTATE SALES & INVESTMENTS 521400, 1501015, 01795582

HAVE YOU HAD ENOUGH LOAN MODIFICATION?  Well, I don’t know about you but I am LM’d out. I have never spent so much time researching and writing about a subject about which I have absolutely no interest.  I’m sure by now we’re all Loan Modification "experts" anyway so alas and thank the heavens here’s my third and final Loan Modification post.

I am going to keep this one short and hopefully somewhat sweet. This post will basically discuss the future of the budding loan modification industry; a future which may be in doubt. While there are indeed many legitimate LM companies and attorneys in the midst of hundreds of thousands if not millions of Loan Modifications Nationwide the big question still remains…… how long will the recycled “MODIFIED” loans remain current?

According to statistics released by www.loanworkout.org, about half of all modified mortgages fall back into arrears within six months.  There is also disagreement over whether mortgage modifications are effective in minimizing losses for investors. http://loanworkout.org/2009/02/loan-modification-lawsuits-looming-in-the-near-future/. This is primarily because the loans should never have been made in the first place and the LTV’s are so upside down that it will take years for the loan to ever pencil thereby dramatically reducing the incentive and desire for the homeowner to keep the home.

Additionally, as many as 3 out of 10 borrowers had no business ever purchasing a home in the first place and were more or less just stuffed into a deal by a greedy and could care less lender.  Many of these borrowers never had the desire or financial wherewithal to honor the loan agreement in the first place. They just leveraged and re-leveraged their mortgage thereby exhausting their home equity like an ATM machine in order to purchase all the toys they had always dreamed of. Hence this whole debacle has resulted in one of the most artificially inflated economic growth spurts in American history.

WHEN OR WILL WE SEE MORTGAGE PRINCIPLE WRITE-DOWNS?  After spending the better part of this year studying the subject, it is my personal opinion that the final solution will rest in the governments hands.  As much as I hate to say it and as much as I’m against all the government intervention and literal takeover of the “American Free Enterprise System” I feel the only way this mess will ever sort itself out is when the FED mandates a principle and interest write down across the board.

THE INVESTOR IS THE ELEPHANT IN THE ROOM.  Most importantly, however, many folks fail to realize that all these lenders no matter how big or how small they are have one thing in common….. “INVESTORS”.   Therein lies a very significant problem. The main reason principal and even interest LM’s are not being done in the volumes that all these LM companies and RE attorneys and scams had hoped they would is because the INVESTORS that all these lenders are beholding to are not budging.  In fact, they’re threatening major law suits against the lenders if they even think about messing with the principle.

That’s why it will eventually have to be mandated by “BIG BROTHER” at some point. So in conclusion I will simply state that the entire LM concept is in question and should be held to great scrutiny by RE practitioners as a whole.  If the subject comes up with your clients, which it surely has and will continue to do, my advice is to simply tell them to seek legal council from an experienced RE Attorney or try to solicit help from the myriad so called FREE government sponsored LM programs currently in place.   Frankly, I wouldn’t even recommend referring anyone directly.  It may just come back and bite you right in the shiny hiney someday. So be very careful.

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John DL Arenden, Broker 

TAG Real Estate Sales & Investments

TAG (The Arendsen Group) Real Estate Sales & Investments is a full service, one-stop, turnkey, family owned and operated real estate brokerage, General Contractor, Manufactured Home Contractor, Developer, Investor, Property Manager, Interior Design, Engineering, architectural, Landscape design, Expert Witness, Consulting, Curative Title and Troubleshooting company with over 100 years of combined experience in the San Diego real estate sales, construction, design & development arena.

 

 

 

 

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Rainer
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Melissa Anderson
Mortgage of Texas & Financial - San Antonio, TX

I've been involved in Residential Lending for 16 years, and am currently a licensed Loan Officer in San Antonio, TX.  Most of the loan officers I have seen doing loan mods, are the same guys that put people in to terrible mortgages.  They cannot make it right now as loan officers with the new guidelines so they switched to mods.  This is the most corrupt area of the mortgage system right now.  The loan mod folks are collecting up front fees, scaring consumers and often cannot deliver on the promises they have made.  Some folks should take their last 2k and leave the house, let it go, do a deed in lieu of foreclosure and spend the last of their savings on an apartment.  Instead they spend the last $ they have on a loan mod & often get scammed.  I'm not advocating walking away from homes, but I do think you should work with your lender directly, not through a loan mod person.  What credentials do they have anyway?  How can they promise results when it is entirely up to the bank to decide?  They claim to have attorneys that "handle your case" but most of these companies are just old broker shops looking to make a buck.  I encourage your response, great post!

Sep 11, 2009 12:49 PM #1
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John DL Arendsen
CREST BACKYARD HOMES, ON THE LEVEL GENERAL & FACTORY BUILT HOME CONTRACTOR, TAG REAL ESTATE SALES & INVESTMENTS - Leucadia, CA
Crest Backyard Homes "ADU" dealer & Contractor

Thanks Melissa. I take your comment as a complemtne inasmuch as you are in the thick of it. You are absolutely right. All a lot of these old loan officers did was change business cards. They obviously didn't know what they were doing when they put some of these folks into a loan in the first place. How in the H do they think they're going to help them now? It's all about money and greed. How utterly shameful.

Sep 12, 2009 02:28 AM #2
Rainer
293,421
Melissa Anderson
Mortgage of Texas & Financial - San Antonio, TX

I don't know.  People get so desperate that they will turn to anyone who gives them a glimmer of hope.  Thanks for your post, keep getting the word out.

Sep 12, 2009 04:40 AM #3
Anonymous
Moch
No you can't.Just like credit agceny, your equity loan information is registered. When you approach the second bank for an additional equity loan, they will pull up your file and they will insist that you consolidate theirs and the first bank's equity loan into one. This means, the second bank will pay off the first one's equity (fees charged to you) and then they will write a equity with the old loan plus the new one provided you qualify for the entire loan of course.In these tight credit markets today this type of fancy-dancy loans are thing of the past. However you can talk to them. If your income is good I mean real good and solid then they will loan you.
Jul 20, 2012 09:50 PM #4
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