Las Vegas, Nevada - We've all heard the same story over and over. It’s the story about a family who gets behind on their mortgage payment, and applies for a loan modification to try and save their home. After waiting many months, the loan modification is denied, and the bank recommends that the homeowner do a short sale. While this story may sound familiar, there is another story, which is much more frightening that is not being told.
Has anyone noticed that banks require homeowners to prove they have the ability to make their mortgage payment as criteria to qualify for a loan modification? Excited homeowners, eager to cooperate and do whatever it takes to qualify, submit their tax returns, pay stubs, bank statements, 401K’s, IRA’s etc., to the bank hoping that their loan will be modified.
After submiting your financial information in good faith, the majority of loan modification requests get denied, at which point banks typically recommend doing a short sale. Now, here’s the frightening part. To qualify for a short sale, you must prove to the bank that you are experiencing financial hardship, and cannot afford to make your payment. Does anybody see the irony (and danger) of the above situation?
Moral of the story: Do not trust your bank. Have you noticed that each time you call your bank; the pre-recorded voice says, “Please be advised that the bank is a debt collector attempting to collect a debt?” This is because the bank does not represent you. Bankers are not your friends and they have no interest in helping you to modify your mortgage.
So why do some homeowners still think loan modification is something worth trying? According to Bill Myers, Nevada Short Sale Expert with The Caliber Realty Group, “Many homeowners still fear short sales, because they’ve been told that banks can come after you down the road for a deficiency judgement lawsuit. What homeowners do not realize is that many banks now include verbiage in their short sale approval letters waiving the right to pursue legal action against the homeowner.” According to Myers, “There has never been a better time to do a short sale.”
Some banks require homeowners to pay a promissory note as a contingency of obtaining short sale approval. A promissory note is a note requesting that a homeowner re-pay (over time) all or a portion of the deficiency (the difference between what is owed on the mortgage versus what the home is currently worth.) According to Myers, “The majority of our clients have NOT been asked to pay any promissory note amount; however, the clients who have been requested to pay are usually the people who applied for loan modification. This is due to the fact that clients who applied for a mortgage modification went to great lengths to prove their ability to pay, thereby dimishing their hardship in the eyes of the bank. What homeowners don’t realize is that applying for a loan modification may put you in a position where you are more likely to be sued by your bank. The less the bank determines your hardship to be, the greater chance that they will request a promissory note.”
To add to the confusion, the Federal Trade Commission recently announced that effective January 31, 2011, Nevada loan modification companies are banned from charging up-front fees for negotiating modifications of residential loans. According Myers, “The loan modification industry has been very misleading for homeowners. Government assistance programs such as HAFA, HAMP, HOPE NOW, and the Making Homes Affordable Program have been failures due to the fact that bank participation is voluntary.” According to the Las Vegas Review Journal, "Most homeowners in Las Vegas are so far upside down on their homes, (owing significantly more than their home is worth) that they don't qualify for the government's $75 billion Home Affordable Mortgage Plan." According to Eric Witksoki, Chief of the Attorney General’s Bureau of Consumer Protection, and the state consumer advocate, “Money spent on mortgage modification consultants is a bad bet for consumers.” Additionally, Witkoski commented that spending money on loan modification is “worse than some of the odds at the casino tables.”
“Homeowners should think twice, before considering loan modification,” said Myers. “If applying for loan modification is going to place a homeowner in a worse position than doing a short sale, then homeowners need to make the right decision for their families. This is why the FTC has stepped in and cracked down on the loan modification industry.”
In 2010, The Myers Team sold more short sale listings than any Realtor or Broker in Nevada. Myers Team Owners, Bill and Francoise Myers have helped hundreds of Las Vegas families avoid foreclosure. Myers said, “Sellers facing foreclosure must remember that banks are not looking out for you or your family. When you work with The Myers Team, our job is to get between you and the bank. We represent our clients, NOT the banks. It is our job to take away the stress and negotiate the best possible outcome. Ultimately, our job is to help our clients get a fresh start.”
Visit The Myers Team web site at http://www.NevadaShortSaleInfo.com
For Non-Short Sales, visit http://www.LasVegasList4Less.com