Don't Make These Do It Yourself Loan Modification Mistakes

By
Services for Real Estate Pros with Real Estate Consultants

A loan modification can really help if you are a suffering a financial hardship and having a hard time meeting your monthly mortgage payments.  You can successfully negotiate a loan modification yourself by dealing directly with your lender, but you do need to have the proper knowledge and present a compelling case for yourself.  Here are 7 do it yourself loan modification mistakes that you need to avoid in order to be successful at getting your loan modification approved.

Mistake #1 Contacting your lender about a loan modification without understanding how the process works or what your lender's requirements are.

You need to become familiar with the loan modification process itself and also what your lender's requirements are before you ever contact them.  Do some upfront research on loan modifications and also see if you can find any particulars about your lender's criteria before contacting them.

Mistake #2 Hiring an expensive loan modification service

You can do a loan modification yourself so there is no need to pay huge fees to a loan modification company.  If you do decide to hire a service, make sure you thoroughly research a loan modification company's background and credentials before paying any fees.

Mistake #3 Talking to your lender's collection department

If the collections department contacts you, they are not the ones that can help you with a loan modification.  You need to speak with your lender's loss mitigation department.  They are the ones that handle loan modifications.  The collections department simply wants to collect on a debt. They are not equipped to help you with a loan modification.

Mistake #4 Not writing an effective hardship letter

Your hardship letter needs to be concise and compelling.  It needs to describe your financial hardship and convince your lender that the reason you are behind on your mortgage payments are because the payments are too high given your financial situation.

Mistake #5 Preparing loan modification applications that contain errors or omit information

It is imperative that you submit an accurate and thorough loan modification application that contains al+l the information your lender has requested.  Mistakes can delay and even cause your application to be rejected.

Mistake #6 Requesting an unrealistic loan modification

If you propose a loan modification that doesn't meet the criteria of your lender your request for a loan modification will most likely be rejected.

Mistake #7 Not submitting a complete loan modification application

If you are missing forms or proof of income requested by your lender your application could be rejected.  With so many requests for loan modifications these days, you need to be sure you submit an accurate and complete loan modification application.

Do it yourself loan modification is possible.  Do your upfront research, propose a realistic loan modification request that is in line with your lender's criteria, and submit an accurate, complete, and compelling loan modification application.

Comments (4)

Sandra Lee
Sandra N. Lee, Notary Public - San Luis Obispo, CA

Hi Chris

I am a Notary Public in California. I have done some loan modification closings and I'm certain there will be more very soon.

I believe the criterion for actually being approved for a loan modification are rigid. That may not have been the case in the past but with the new Recovery Act and huge Bailout program, the banks are under more scrutiny. Unfortunately, a lot of dishonest people are getting greedy and offering loan mods for huge up-front fees. It's not right to further deplete a person's bank account to "bail" them out unless there is a money-back guarantee.

Luckily, more restrictions on "who" can receive the loan modification should cut out some of the obvious borrowers from getting money for their irresponsible behavior regarding loans.

Mar 04, 2009 01:35 PM
Anonymous
Eric Morris

LOAN MODIFICATION SCAMS AND RIPOFFS CLASS ACTION

 

Have you been ripped off by a loan modification company? Were you scammed, lied to or defrauded by a loan modification company? Our law firm is fighting illegal and non-compliant loan modification companies and seeking injunctions to stop them from continuing their illegal activities and also seek money damages to make you whole. Call us for a free initial consultation.

 

Here are some of the loan modification scams we are seeing. If you have been a victim of any of these activities please contact us for a free consultation. We will look up the loan modification company and see if they are properly licensed to engage in the loan modification business. In addition, we will scrutinize their activities to see if they were negligent in performing loan modification services.

 

(1) Non-compliant company loan modification scam: In order to perform loan modifications in California a Broker is required. The California Department of Real Estate ("DRE") has declared loan modifications to be a licensed activity. As such, a Broker's license is required and any salesperson working under the Broker must also be licensed. In addition, loan modification marketing, solicitation, processing and negotiation has also been determined to be licensed activity by the DRE. We will investigate your company to see if they are properly licensed. If not, we will seem an injunction preventing them from engaging in the loan modification business and seek to prevent future loan mod scams by the unlicensed or non-compliant entity. Note: If the Broker accepts an advance fee (charges you a fee for the service) they are required to have a loan modification contract that has received a letter of non-objection from the DRE. There are only a limited number of companies with an approved advance fee agreement (we will investigate this).

 

 

(2) Attorney-backed / Attorney-based loan modification scam: This is the new flavor of the day in loan modification scams. Attorneys are lending their names and credentials to a loan modification company (which may either be properly licensed or not). The Client thinks they are hiring a lawyer and that they have put their foreclosure issue in the hands of a qualified attorney. In many cases, the Attorney either does not exist, or merely lended the broker the use of the name, address, and merchant credit card account so that the broker can bring in loan modification business by holding itself our as a legal entity of sorts. Both the California State Bar and the DRE have tried to warn both brokers and attorneys about this very questionable conduct that raises issues over attorney fee splitting, partnerships with non-attorneys, circumvention of the California Foreclosure law, and violation of the Attorney-Client relationship. Be very careful when thinking about going with an "attorney based" or "attorney backed" firm. Ask yourself why you wouldn't just go straight to an attorney.

 

(3) Take the money and run loan modification scam: With the Internet any scam artist can hold itself out as a real company. We are seeing more and more loan modification companies that appear to be operating covertly, in violation of State licensing requirements, and these companies may even be offshore. Do not contract with any company if you cannot verify their physical address and telephone number. Once you give them your money you may not see or hear from them again. Even if you receive a mailer piece from a company that looks to be a legitimate loan modification company, proceed with caution and prudence. If you have been scammed or ripped off by such a company please contact us immediately.

 

(4) False promises loan modification scam: Did your broker or attorney-backed/attorney-based company promise you something they did not deliver (ex. principal loan reduction, guaranteed loan modification, 100% money-back-guarantee, etc.) and fail to deliver? If so, they may have either ripped you off (fraud, deceit) and/or failed to properly process your loan modification (professional negligence). Many loan modification companies will hold themselves out as "loan modification experts" or "loan modification specialists" even though this business is fairly new and even though the loan modification company may have had no special sill, training or experience in this field.

 

(5) The loan audit that never happened loan modification: Many brokers and attorney-backed companies are representing that they will get your loan modification processed faster and more efficiently and get you a better loan modification because they will have a "loan audit specialist" or attorney or law firm conduct a forensic loan audit. We have seen many cases where either no loan audit is performed or a lousy one paragraph summary is provided that makes it questionable whether or not the loan audit was ever performed. Especially in regard to Option ARM loans and NEGAM loans we would expect a more thorough loan analysis.

 

This is just a short list of the types of loan modification scams, frauds, rippoffs and negligence we are investigating on behalf of our homeowner clients. If you feel you have been lied to, cheated, ripped-off, abused or neglected by your loan modification company, please contact us.

 

We are a law firm licensed to practice law in California. We will provide you a free initial consultation, and if your case qualifies (most do) then we will take your case on contingency and seek money damages and attorney fees caused by the loan mod scam artist.

 

This is an advertisement and communication pursuant to State bar rules. We only seek to represent California homeowners with this service. This article is not legal advice or intended to serve as legal advice. No attorney client relationship is created by sending us an email or phone call.

 

Contact Us:

Eric Christopher Morris

Attorney at Law

Southern California Lawyers Group, PC

9330 Baseline Road, Suite 203

Rancho Cucamonga, CA 91701

(909) 466-4400

(909) 839-5004 Fax

www.lawsclg.com

emorris@lawsclg.com

 

Mar 25, 2009 03:53 PM
#4
Anonymous
vhita

Greetings! Do i need a license to practice loan modification in California?

 

Apr 13, 2009 05:08 PM
#5
Anonymous
Free loan modification articles

Loan modification is useful but there are mistakes which need to be avoided

Jul 19, 2009 01:49 AM
#6