Loan Modification Hell

By
Real Estate Agent with Bennett Realty Solutions 628599

Yesterday I received a telephone call from a distressed homeowner who was referred to me from a nice young lady whom I met at a networking event last month.  She informed me that her loan was initially with Chevy Chase, who then sold it to another company, LPBS. They (LPBS) told her to stop making payments in order to qualify. She took their advice and of course fell behind. She was then turned down.

This poor lady is literally at her wits end in trying to get her loan modified. She informed me that she has at least 5 note pads filled with information from her lender giving her the run around.   

My heart goes out to homeowners who are desperately trying to stay in their homes.  My advice to her was to not give up!  She's doing the right thing by joining herself with the "Making Homes Affordable Program" www.makinghomeaffordable.gov and connecting with a housing counselor.  I informed her that if the bank says no, try again, don't give up! We are all in this together, realtors, lenders, and most importantly the homeowner. 

Comments (4)

Kenneth Young
Uni International LLC - Virginia Beach, VA

Marie - Good Post as far as problems with Loan Modifications.  The company that you posted about has more than a few complaints. They are not a bank, but a servicing company.

http://ibm-lender.pissedconsumer.com/the-co-lpbs-did-nothing-for-me-20101016202881.html

I know of a company headquartered here in Virginia that is just like them.  I had a former employee want to get into the Loan Modification business about 2 years ago.  I told them that I would only if it could help the clients not hurt them.   The employee, I'll call her "Val" stated that she didn't understand the company that she worked for, at any time in the pipeline they have 10,000 loans that needed "loan modification", but that 99% of the loans didn't get approved, because they kept asking for more paperwork from the home owner.   Now the home owners were behind in payments, so the company immediately took the escrow account.  Then of course, they charged the home owner $1500.00 for the loan modification fee just to process the paperwork.  The initial fee was $500.00, and each time they went back for more paperwork, they would charge them again.  Now, we all can do the math, if there's 10,000 loans x $500.00=$5,000,000.   So, you can see why they don't have to approve the loan to make money.  But it even gets worse.  

You are correct, they tell the home owner not to make payments so they can be "qualified" for the loan modification.  But, it is verbal, and in the state of Virginia, what is black and white are the terms.  Someone telling you something does not hold up in court.  So, the home owner doesn't make payments, the loan modification process takes 5-6 months only to notify the home owner that they are not "qualified" for a loan modification.  Ok, so they go into immediate foreclosure proceedings or offer the home owner to sign a deed-in-leu.  Yes they can put the house up for short sale, but the company will not agree to any terms, but that's not in writing either.  And while the home is in short sale, they are still proceeding with the foreclosure.   In the end, they get the house.  Oh, and any payment the home owner pays, doesn't go towards the loan amount... it is eaten up in fees.  Wait, it gets worse.

Since they are a servicing center, that means they are not actually the note holder.  So, they notify the note holder that the home owner is in default and the market is bad, and the company has to foreclose on the property, etc... and the note holder is lucky if they get .25 cents on the dollar of the outstanding loan amount.  So, what happens is the note holder agrees to sell to the company the note, because they don't want to have to pay for foreclosure proceedings out of their pocket, because they are already taking a big loss on the defaulted loan.   So, the company buys the note at .25 cents on the dollar, then sells the note on the secondary market for .45 cents on the dollar.   All the while foreclosure proceedings are almost done, the home owner gets kicked out, the orginal note holder gets taken to the cleaners, and the loan serving company makes all the money....

Hope that helps clear things up, I had to figure that out for the ex-employee, and the ex-employee copied all the files of the loan company and gave them to me, so I have the proof but what am I going to do with it?  

If you have any questions.   Let me know.

Kenneth

May 18, 2011 03:24 PM
Maria Wallace Jones
Bennett Realty Solutions - Brandywine, MD
CDPE, ABR, Brandywine MD

Hi Kenneth; thanks so much for your information!  I will pass it on.  Peace and Blessings to you and your family. Maria

May 19, 2011 09:00 AM
Maria Wallace Jones
Bennett Realty Solutions - Brandywine, MD
CDPE, ABR, Brandywine MD

Hi Kenneth; thanks so much for your information!  I will pass it on.  Peace and Blessings to you and your family. Maria

May 19, 2011 09:01 AM
Maria Wallace Jones
Bennett Realty Solutions - Brandywine, MD
CDPE, ABR, Brandywine MD

Hi Kenneth; thanks so much for your information!  I will pass it on.  Peace and Blessings to you and your family. Maria

May 19, 2011 09:02 AM