Most importantly was the systematic weeding out of deceptive service providers who set up shop to make the most of distressed homeowners by charging a fee upfront a never doing any job. I will say this now and replicate it again as it’s the one most significant bit of advice you ought to know when looking for a loan modification: NEVER PAY UP FRONT FOR A LOAN MODIFICATION!
Who will negotiate a loan modification?
You that is right. Even though it can be to your advantage to have a professional help you through the process, there’s nothing stopping you from attempting financing modification on your own.
Foreclosure Advisor – These individuals are generally non licensed professionals and may either be for-profit or non-profit businesses.
After July 1, 2009, in the state of California, all foreclosure advisers have to be registered with the Attorney General’s office and post a bond in the amount of $100,000 (California Civil Code section 2945.45).
Attorney – Any lawyer licensed in the state where your pending foreclosure is located. You can find all enrolled lawyer’s by looking martindale.com
Real Estate Broker or Agent
The most common hard money lenders resource for suggestions and help to negotiate financing alteration or short sale. Although not all property agents have the expertise to qualify as experts within the field, they’re allowed to help whenever they hold a current real estate license. You may find out if your agent or agent is licensed at the California Department of Real Estate site dre.ca.gov
Protect yourself from loan alteration scams. How to spot foreclosure fraud.
It’s also important to remember that if it seems too good to be true, it probably is. The same as a stated income loan with a”beginning” interest rate that’s unusually low, a loan mod with terms which don’t pass the sniff test are also unlikely to show accurate.
I’ve listed below some of the more common loan modification scams for you to review and catalog:
I will again start with the loan modification counselor that asks you to pay a fee BEFORE you’ve successfully got a PERMANENT loan alteration. I’ll state it again, NEVER PAY UP FRONT FOR A LOAN MODIFICATION!
The foreclosure advisor who tells you to create your monthly obligations to him/her rather than your lender during the loan modification process. This should never occur.
The adviser who poses as a government-related entity. Often using titles that sound as they are authorities related and asking you to cover them upfront to meet the requirements for one of the particular government-related apps like HAMP or HAFA. These classes will suggest that their organization is directly linked to the program and they charge you to confirm you’re eligible. Your lender will say if you are qualified for HAMP free of charge. You could also see the HAMP waterfall below.
Bait and switch”rescue loans” It is imperative that everybody read and fully understand what they’re signing. Know about who you are dealing with and take good care not sign over the title to companies or persons who ask you to sign title claiming to market the house back to you once the process is complete. These strategies may also include asking the homeowner to move out throughout the procedure, allowing the”consultant” to collect rent until the home finally goes to the foreclosure sale. In this case the adviser never completes the alteration, instead, they simply postpone the foreclosure letting them collect rent for a longer period.
A late add to this listing, from the CA Attorney General media release, beware of forensic loan audits. In this scenario the consulting company employs the forensic loan audit as a means of getting the homeowner to pay up front for the tools needed to finish their alteration; in this case a forensic loan audit. Once the fee is paid, no work is completed along with the loan modification never happens.
Things to be aware of moving in. What are your chances of succeeding?
Oftentimes homeowners are willing to suspend fact, attempt anything and trust anybody who promises to allow them to remain in their property. Fueling additional confusion at the loan modification procedure is the fact that many defaulting homeowners used stated income loans to refinance or make their purchase. Every homeowner must know before entering the loan modification procedure that you must have the income to be eligible for a loan modification.
This is worth repeating: If you cannot document income sufficient to pay your mortgage (that really is a new lower mortgage payment), then you won’t find a loan modification! Further, although the bank may have taken your word for it when you qualified to take out the loan, they will need your document and will definitely confirm your income before agreeing to change your loan. Generally speaking, the objective of a loan modification would be to decrease your monthly payments into an amount equivalent to 31% of your current gross income.
Banks also need you own a hardship prior to looking for a modification. Examples of generally accepted hardships are divorce, death of an income supplier, loss of job or income, forced relocation for employment, or pending interest rate increase. They aren’t likely to change your loan because you’d love to refinance, even if your current income supports the monthly payment.
Next, the banks expect you to devote your savings before they consider changing your loan. Two things to notice here; initial a number of your retirement accounts are off limits as a result of the ERISA laws, meaning that the banks cannot go later or require that you liquidate them so as to make mortgage payments. Secondly, it’s generally accepted that the banks will probably expect a house owner to have greater than two and half times their present monthly payment till they modify a loan. As an example, if your monthly mortgage payment was $100 and you had $250 in your savings account (2 1/2 times your repayment ), the lender would expect you to use that cash before they modify your loan.
Virtually anyone can get a temporary modification through their bank. The proposed reasoning here is that the lender is trying to collect a bad debt, so as to evaluate their ability to accumulate banks will try to collect all financial information you supply to later accumulate on this awful debt. If you’re falsely or hopelessly building a case for a modification by demonstrating income and assets, that information may ultimately prove detrimental to your brief sale negotiations.