Loan Modification????

By
Mortgage and Lending with Advocate For Fair Lending
I am looking for some feedback into what is supposedly the new hot item for those in the mortgage industry."Loan Modification" When you read information from HUD it tells you to not pay any fees for a loan modification, use your lender at no cost. I recently advertised to help clients with "no money no equity no credit" to help with current mortgage situation. I have received numerous calls and I can say that 95% of my calls were from Homeoweners who have been unsuccessfull in obtaining a modification on their own. Are the lenders still trying to pretend that this is not happening? It has always been my understanding that banks, lenders were not in business to own homes they wanted to collect the interest off the monthly payment. With that being said, there should not be the need for outside modification companies becasue the banks will have a department ready to handle any and all inquires. Therefore clients can call or write to explain hardship case and have their loan modified in order for bank to receive monthly interest which is why they are in the busines of lending. Unfortunately that has not been the case, if the client is not late on mortgage dont bother, they feel there is no need to talk, you are not late, you can afford the payment. Where does that leave the consumer they are left with no choice but to try an outside modification service because they are having 95% success rate of modifying loans. Why does a call from an attorney work more than the consumer? the consumer is the one who is paying the mortgage and also had to pay the attorney, which is taking away from paying the mortgage. However are banks creating another industry destined to boom and bust similar to what they created for mortgages with their "exotic" loan programs? I am not sure I guess will have to wait and see. Have any clients owe more than their house is worth? Recently adjusted and cannot refi? Neil Mercurius Jr. 951-712-1931 www.spiritfilledintermedia.com

Comments (9)

Veronica DeCarolis
Weidel Realtors - Flemington, NJ

Apparently the banks are swamped with these requests and it has always been difficult to find the real person who can make these decisions.  Thanks for writing.  Veronica

Jul 08, 2008 12:55 PM
Nancy Larson
I am a licensed referral agent in NJ - Hutchinson Island, FL

Honestly, I know of someone who just got her loan modification. She had been working on it for 6 months. And she was paying 9.5% on a 700,000 home. Her husband had passed away and her business dropped (sub prime, need I say more) and she couldn't afford the house anymore.

Friday, she got the modification that one would only dream of. First 5 years...2%, next five 4% and I believe it was either the next 5 or the next 10 6%.

Banks are assisting customers. I am now helping a neighbor with her loan modification. One step at a time, one day at a time.

Jul 08, 2008 01:04 PM
Michelle Chamberlain
Above All Financial Services -Pennsylvania Mortgage Broker - Secane, PA
Suburban Philadelphia Mortgage Broker

I understand that people are legitimately in situations where they are in loans that they cannot afford but if banks begin making it a practice to modify loans, especially for those who are not behind, what is to prevent everyone from deciding that they no longer like the terms of their loan and they want it modified?  Heck it may even be worth it for someone to quit their second job or for a wife or husband to stop working in a dual income household in order to "prove" they cannot afford the loan, if they could shave 100k or even 50k off their mortgage plus compounded interest.

Jul 08, 2008 01:09 PM
Kate Bourland
Marketing with Kate - Redding, CA
Onlilne Marketing Mobile Marketing

Neil,  there is a significant disconnect between what the banks are saying and what they are doing.  It's important to understand that there are multiple tiers to the loss mitigation department.  The front tier, being the one that the consumer talks to is like the gate keeper.  Their job is deflect and discourage.  This is one of those instances where the do it yourselfer is at a significant disadvantage.  There is a big learning curve, they don't understand the lingo and the bank will most likely take advantage of the consumer (big surprise).

The trick is getting past the 1st tier and to the 2nd tier of loss mitigators at the bank.  For the homeowner, this usually only happens after a payment gets missed - counter intuitive I know.

I'm not sure if you are trying to do this as a benefit to your clients as I was originally.  It's beneficial to all involved to connect with someone who does this exclusively.

I'm on a call right now but I'll be happy to give you a shout when I'm done.

 

Jul 08, 2008 01:12 PM
John Cannata
214-728-0449 http://TexasLoanGuy.com - Frisco, TX
Texas Home Mortgage - Purchase or Refinance

Good point Kate.  There are several tiers to a Modification (and Short Sale for that matter).  And that first step is having the accounts go delinquent.  That is something I never fully understood.  Why would a lender want the customer to be delinquent before they could talk with them.  If the customer KNOWS they will be delinquent and they can financially show it is going to happen, why wait for it?  The lender should be able to discuss the modification, short sale, or repayment plan with the customer at that time and not after they go delinquent and have received a foreclosure notice.

With the number of loans being submitted for Modification and Short Sales, I am sure the lenders are overwhelmed with the files and the phone calls on top of that.

Jul 08, 2008 01:23 PM
Kate Bourland
Marketing with Kate - Redding, CA
Onlilne Marketing Mobile Marketing

John, you are absolutely right.  The whole thing is counter intuitive.  Remember though that the last time this happened was 12 - 13 years ago.  Few of the same players are around to bring some sense or experience to things.  For the most part the front line of defense are brand new people with no problem solving skills.  The system is severely broken at the expense of the consumer. 

Another piece of the puzzle is that each loan servicer is only authorized to modify a certain number of loans in a portfolio.  This means that only the most aggressive get the cake.  There is much more to loss mitigation than meets the eye.

FYI, short sales and modifications are both forms of loss mitigation so they both go through the same department.

Jul 08, 2008 04:20 PM
John Cannata
214-728-0449 http://TexasLoanGuy.com - Frisco, TX
Texas Home Mortgage - Purchase or Refinance

I actually worked in the Loss Mitigation Department for a short while at CHL.  We worked Modifications, Short Sales, and Repays.  I found that the company was just not ready for the number of files to be received.  So, too many files and not enough employees to complete the files.  Especially when you factor in something like Katrina, which throws a wrench into things because that is one of those situations that no one is ready for.  The company then uses resources from one department for another, until they can hire the staff.

Endless cycle sometimes.  Good Luck!

Jul 08, 2008 04:33 PM
Kate Bourland
Marketing with Kate - Redding, CA
Onlilne Marketing Mobile Marketing

John, sounds like you have a lot to offer this current cycle. 

Jul 09, 2008 08:04 AM
John Cannata
214-728-0449 http://TexasLoanGuy.com - Frisco, TX
Texas Home Mortgage - Purchase or Refinance

Thank you Kate.

Jul 09, 2008 08:29 AM