Loan Modifications

Mortgage and Lending with All California Lending BRE# 01458390

Loan modifications are the new buzz among real estate professionals and homeowners in distress alike.  With the current financial mess, and the continued slide in the real estate markets, banks are now starting to ramp up efforts to keep homeowners in their homes. 

Financial institutions don't want to foreclose on your house.  It costs them time and money, and they would greatly prefer to have a borrower who can make their mortgage payment.  With the recent destruction of the housing market, though, many borrowers don't have options previously available.  If you lost your job three years ago and could not make your mortgage payment, you could simply sell your house and buy something smaller or rent.  If your company transferred your job, you would just sell your home and move.  With one in seven homes in the United States underwater (there is more owed on the property than it is worth), those options simply are not there today.

These days, many are stuck with the loan they have, the home they have, and it really seems overwhelming to try and work with your financial institution.  Don't feel that way.  It can be a tedious process dealing with the bank, but if you work at it, you can succeed in working out a loan modification with your bank or lender. 

The first thing to do is actually contact your financial institution.  It would amaze most people to know how many people get in trouble, and simply do not ever contact their bank.  Call the customer service number that is located on your monthly statement and ask for the loss mitigation department.  Keep this number, along with your loan number, handy, you will be using it often if you are traveling this path.  The loss mitigation department is who you want to talk to, whether you are looking for a lower rate, a principal reduction, a short sale or any other loan modification.  When you call them, you should have a call log as well.  Log each call, who to spoke with, and what was discussed.

When you call, they will ask for some paperwork from you in order to review your file.  I suggest having a good game plan before moving forward from here.  Decide what you want.  You need to know what you want, and ask for it.  Do you want a principal reduction, a short sale, a reduced interest rate?  There are many options, and how you decide to proceed can impact on the outcome of your request.  This brings me to the next topic.  When you call, they will want some paperwork.  Usually this includes an expense itemization, hardship letter and income documentation.  When they start asking for paperwork, many people think they need professional help.  I'm not a huge fan of this, but that is my personal opinion.

There are many loan modification companies out there, they employ attorneys, and will go through the loan modification process for you.  Most charge between $1,200 and $4000 for their services, payable upfront.  I really do not encourage clients of mine to take this step, unless there is something amiss with your original loan paperwork, or some legal aspect that you need to correct.  For the most part, I believe you can do this yourself.  What I do suggest, though, is to get yourself informed so you understand what you are doing and what you should expect.  Take a look at this group, they have a loan modification package that gives you the information you need to do this yourself, saving thousands of dollars upfront.  In addition, they have been around for a while, and have been doing modifications for their clients even before this current downturn.  Many of the loan modification companies you might hear about have just sprung up to take advantage of the market.  I would undertake this loan modification process myself, with some research and work, you can have a  do it yourself loan modification..

Good luck, next I will be looking at BPO jobs and services in more detail, check back in!


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Chris Goulart

California Hard Money Loans & Solutions
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