I recently read an article bashing loan modification companies. The report read that loan modification companies were taking advantage of consumers by completing a financial event that any homeowner could complete and charging extraneous fees for doing so. However, the loan modification process is not as simple a process as it is being made. On one side of the phone of this “simple process” are scared homeowners, who are stressed about losing their home and possibly employment as well. More than likely these homeowners are “punch-shy,” with the remembrance of the results of their last financial task labeled as a “simple process”, the purchase of their home. In addition, loan modification is a brand new concept, as in no other time in history have the banks been known to “work out” payments with loan holders unable to afford their expenses. On the other side of the phone call is the bank that educated the loan officers, to advise the homeowner, to accept inflated home values coupled with risky loan products. These lenders have been calling the homeowner at home and work as well as sending letters threatening to reclaim the home for the past 3 months to 2 years. Considering the amount of tension between the involved parties and the high stakes of one of life’s essentials, shelter, is on the line, this process can be likened to performing life saving surgery on one’s self …and is not a simple process. All the non-profit instructions and do-it yourself-help manuals cannot take the place of experience and understanding of the inner working of a body, whether biological or banking body, to be successful and well advised.
I spoke with a lady that completed her loan modification negotiation. She reported she had to “work-up the nerve” to call the lender on five separate occasions, only to speak to four angry and non-cooperative bank representatives before connecting with a friendly lender representative on the 5th call. She was able to achieve a once and a lifetime loan modification to save her family’s home. Her kids could stay in the great school district with their friends and her work commute to her 3 hard fought for jobs could be maintained… she had done it all by herself. However, when she received her loan modification paperwork, she found that her new modified loan payment was $1800 (a $900 savings) for 2 months, the 3rd payment was $75,000 and then her monthly payment would return to the previously unaffordable and adjusted interest rate. Of course she realized the intricacies of this modification contract because she asked a professional loan modifier to interpret the “legalese” written documents. Of course, her case is isolated, but the average homeowner can modify their home’s loan, just as the average American can buy a home. However, signing the 3 dozen disclosures mandated by government to forewarn new homeowner is no more educating about the home buying process than a hand full of loan modification websites and a modification contract written by and at the best interests of the bank. Of course, some mortgage loan modification companies will take advantage of homeowners. Its up to the homeowner to interview several companies, ask questions on unclear matters and get recent references. The homeowner facing foreclosure should seek out knowledgeable professionals that understand the language of the banks and the actual predicaments and financial abilities of the homeowner. Loan modification professional should make sure the homeowner facing foreclosure fully comprehends their mortgage documents and truly understands their rights and options. There will always be people that will be upset and complain they have been rip-off and sometimes they really have been, but talking to an industry professional is always best when dealing with the particular industry and usually worth the costs.