Home loan modifications are a joke in your town! As a licensed Real Estate Broker working in the Northern Va area I have spent a good deal of time over the last 4 years working with distressed homeowners. Over and over again, I hear the same horror stories from homeowners who are stuck between a rock and a hard place because of their lenders incompetence. Here is the autonomy of a failed home loan modification:

  • You fall behind 30 days, your lender or servicing company contacts you and tells you how much they want to work with you to save your home (this is of course all scripted and recorded). They tell you that they have several programs including a Federal Program to make your house more affordable. They exhort the benefits of reducing your interest rate and “forbearance” of your overdue monthly payments. Like many homeowners you see this as a lifeline and you being the paperwork process. This is when the wheels begin to fall off the wagon. At first your lender asks for basic income documents, then they ask for a breakdown of every daily expenditures under the sun. If you are lucky, they will only ask for this information 3 times (the lender tends to lose paperwork like you lose your socks in a dryer). Once you have given the lender everything they have asked for including simples of DNA as well as a birth certificate( remember this was the same bank that only needed you to fog up a mirror to get the same loan) everything goes quite. For months you hear nothing. You still get mortgage statements every month showing that you are behind and in jeopardy of foreclosure. Then the occasional mailings from Realtors, credit companies and people promising to you help (for a small fee) start to trickle in. This tips you off that your problem is no longer a personal matter and that the lender is not laughing with you but at you. You also notice that the lender is still dinging your credit report every month like clockwork. When you reach out to the lender you get a nice person telling you that your loan modification is still under review. This eases your nervousness a little as you start to notice more and more threaten letters from the same lender telling you everything is okay. Then one day (usually 3 to 4 months from your application for a loan modification) you get a certified letter from a law firm telling you that your house will be foreclosed on within the next few weeks. You franticly call the lender who promises to approve or disapprove your application before the foreclosure date. Your throat becomes dry and you notice that you are now sweating because this is the first time the lender has told you that you could be “disapproved” for the loan modification. In which case you will have to pay all back payments, late fees, and now attorney fees before your house goes on the court house steps.
  • So what are the “Do’s” and “Don’t’s” for homeowners facing this situation?

Do’s Do apply for a modification. My brothers favorite saying about playing the lottery is; “you can’t win if you don’t play”. Give it a shot it might be your lucky day.

Do contact your lender early and often during the process. This will not guarantee quicker servicing but at least you’ll stay up to date.

Do speak with a LOCAL non-profit housing counselor

Do reach out to a Real Estate attorney if you can afford one

Do look up a “LOCAL” real estate professionals with a strong track record of helping distressed homeowners (I would Google “short sale, CDPE (certified distressed property expert and your location)

Do keep track of every conversation you have with the lender including the name and number of the person you are speaking with. I have found that lenders have funny memory’s at times…

Do come up with a plan B even if you have no plans on losing your home to the lender. I normally help my clients by showing them rentals in the area and talking them through all the issues involved with credit, Short Sale or a foreclosure might have on them. I also spend a lot of time just talking with them about the situation and what they can expect. There is nothing more personal then your home!

Don’ts

Don’t pay anyone upfront fees to help you save your home. These are most likely scams prying on distressed homeowners

Don’t buy into anyone promising to save your home! No one can guarantee this to you.

Don’t WALK AWAY from your home. Even if you are hopelessly upside down and have no desire to go through the process you can still come out with a little cash (up to $3,000), a manageable credit record and even a couple months of free rent if you play your cards right. Contact your LOCAL CDPE certified Realtor.

Don’t panic! I have helped hundreds of homeowners since this crisis’ started 4 years ago and I am here to tell you that YOU are not alone. Just don’t panic So, why are Home Loan Modifications a cruel joke you say? Because we are not too big to fail!

Need help? Call or email me for a confidential appointment.

Chuck

Btw, here are some interesting links that talk about the mess we call the housing industry.

Bloomberg News

NBC News Scams

Why do Bank want to foreclose on your home

NYT

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