LOAN MODIFICATION FIASCO

In today’s scheme of financing loan modifications are more for these homeowners who are upside down on their home and owe more than its current value. Most have adjustable loans that are either negative 10 to 25% at the time they recast the loan or have been paying a fixed lower interest only payment for a number of years. In either case, their payment has now increased so substantially they can’t make the payment and now because of the downward trend in housing values can’t sell either.

I hear many stories from clients who call their lender and ask for a modification and they are told they can’t be helped unless they’re behind in their payments usually 3 months. So at the direction of the lender, they forego their payments and then apply for a modification. With hardly anyone ever being approved the homeowner ends up in a worse situation than before. The sorry conclusion to a lot of this is the homeowner walks from his home to only eventually lose it at foreclosure.

To make it even worse, some modification specialists are no specialists and are in violation of the law. Enforcement of the laws in regard to modification have been stepped up especially against those who ask for and collect fees up front.

These usually unlicensed loan originators, now working as loan modification specialists for unlicensed companies, prey on the financially stressed. In conclusion, beware of fake promises that common sense tells you are not likely to happen. Homeowners should be advised to check out anyone suspect at the DRE’s Website: http://www.dre.ca.gov or a lawyer at Http://www.calbar.ca.gov as well as your local Better Business Bureau.