Many Homeowners Not Getting Loan Modifications
Nearly every article that comes out from someone offering foreclosure assistance, or acting as a “consumer advocate” for homeowners facing foreclosure, seems to say the same thing- lenders are not offering enough loan modifications to borrowers.
The office of Massachusetts Attorney General Coakley reviewed the files for 144 “loan modifications”and found that not one of them had received a principal reduction, and “virtually none” of them reduced the homeowners’ monthly payments.
I’ve also been getting calls lately from homeowners telling me that they’d received a previous “loan modification” from their lenders. Yet, when I review the terms of their arrangement, what they got was definitely NOT a loan modification.
There are a couple of points I’d like to make here:
1- Just because your lender calls your workout a “loan modification,” doesn’t mean that it is one
2- Lenders have learned that “loan modification” is a magic word that get borrowers to respond like Pavlov’s dog. All they have to do is say, “We’ll take the past due payments and put them at the back of the loan,” and homeowners won’t seek foreclosure assistance, they’ll just send in their documents, thinking that everything will be alright. “Good doggie!”
3- Once they get those documents in, you’re subjected to a financial review. If you don’t pass the review, you’re not going to get a loan modification.
4- It’s not just homeowners that the lenders are messing with. According to the Homebuilders’ Coalition for Responsible Bank Behavior, the pattern is, pretend like you’re working with the borrower, and when they run out of options, foreclose anyway.
5- Attorneys general have spent a lot of time and effort trying to “bring lenders and borrowers together.” What they never realized is that they were leading sheep to the slaughter.
For what it’s worth, I’m not seeing any difficulty at all in obtaining loan modifications for any of the borrowers who engage me to provide foreclosure assistance.
What I am starting to see is that a number of these files would have been denied assistance or simply fallen through the cracks without my involvement. I’ve seen mortgage companies try to weasel out of a loan modification for the flimsiest of reasons.
So it’s clear to me that the most homeowners are not equipped to win this game- it’s not a level playing field. Despite all the hype, mortgage companies are still ready, willing and able to foreclose on you for a number of reasons.
Avoiding foreclosure is not a do-it-yourself business. If you don’t know what the parameters are to qualify for a loan modification, then how much sense does it make to do this without foreclosure assistance?
If attorneys general are testifying to Congress that lenders are not modifying loans, and we’re seeing the whining and complaining from non-profit housing counseling agencies about how tough their job is, then it’s clear that getting a loan modification is not a slam dunk… unless you get in touch with the right people.
If you feel like you need foreclosure assistance instead of a “hope and pray” strategy, get in touch with my office.
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