How to Guarantee You Won’t Get a Loan Modification
I recently read the unfortunate story of a homeowner in foreclosure who decided to take matters into her own hands. She took out a “Pick a Pay” loan in 2006 and is now trying to avoid foreclosure because she can’t afford the payments now.
Apparently, the homeowner and a number of angry protesters stormed the front counter of a Wachovia branch, demanding that a fax be sent to the CEO of the company.
Over 98% of my clients get a loan modification from their lender, and I will tell you this: not once did we “bum rush” a local branch of the lender. They may have WANTED to physically assault their mortgage company, but none of them did.
It turns out that the homeowner is a member of ACORN, a group that likes to organize public demonstrations. I have to say this: if you have to resort to publicity stunts to get results for your clients, then you have no idea what you’re doing, and you should probably quit PRETENDING that you are an expert at helping people to stop foreclosure.
The fact is this: the foreclosure business is a numbers game, pure and simple. If the loss the lender will take by helping you to avoid foreclosure exceeds the loss that they’ll have if they take your home, then they’re going to take your home… period.
No amount of publicity stunting is going to change that cold, hard fact. I see that they played the race card in this story, again pointing to a “pattern of making loans to elderly minority homeowners in Oakland and other cities.”
My question is, would they have preferred that the banks made it impossible for these homeowners to get a loan? You can look at any bank in the country and you’ll find such a pattern. The fact is, that banks were REQUIRED to make home loans in these areas, even if they would have preferred not to.
The glaring omissions in the story were: why does an 81 year-old still have a mortgage? She’s owned the home for 40 years… did she pay $300,000 for it back in 1968, or has she taken out her equity and spent it on other things? How much is owed, and what is the home worth? What were the proceeds of the loan used for? Why is the affordability of the loan only an issue now? Did she NEED the loan? Was she forced to take the money?
My guess- and it’s only a guess based on the situations I see on a daily basis- is that she couldn’t have qualified for a loan that size with any other loan product. If she’d tried to get a 30-year conventional at a fixed rate, she would never been able to get the loan.
By no means am I a fan of the mortgage industry- neither origination nor the loan servicing side of the business. But I am dazzled by how quickly some borrowers forget all of the benefits they received by getting the loans that they had.
I’m also amazed at how quick many borrowers are to ask for principal forgiveness on refinanced loans. These are loans where they took out more than the purchase price of their homes to buy cars, pay off high interest rate credit cards, take trips, build additions, etc. Now that they’re underwater- they owe more than the home is worth- they suddenly think that the mortgage lender should take a hit because housing prices have declined.
It’s not the mortgage company’s fault that housing prices have declined any more than it’s the fault of the homeowners. And in today’s market, getting a loan modification in a situation like Ms. Walker’s is fairly straightforward.
If Ms. Walker was working with anyone with half a brain at ACORN, she wouldn’t have to resort to such tactics. She’d be awaiting her paperwork from the loss mitigation department.
The key to avoiding foreclosure for the long term is not about intimidating, embarrassing or trying to coerce people who have nothing to do with loss mitigation department. While this activity might get Ms. Walker a second look, at the end of the day, if her numbers truly don’t work, she’s still going to lose her home.
Getting a loan modification has nothing to do with staging demonstrations, and everything to do with making an effective case for working with you, rather than against you. If you want to avoid foreclosure, you need to know whom to talk to, what to say, and how to present your situation so you give yourself the best possible chance of keeping the home for the long haul.
If you want to keep your home and you don’t really know how to get the best loan modification terms (that’s 90% of the borrowers out there), then get yourself some expert assistance.
I will promise you this: as part of our program, you’ll never be asked to “bum rush” your mortgage company. You’ll never be forced to embarrass yourself just to get the mortgage company to cooperate with you.
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