Attorneys or ‘mod’ companies not needed for most loan modifications

By: Dena Kouremetis
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The ads and the signs are everywhere. “Don’t lose your house to foreclosure! We can help you keep your house and lower your payment!!” The companies that advertise these services can charge anywhere from $1500 to $3,000 (many charging you upfront fees) without telling you that most or all of what they do are things you can do yourself. Informed and prepared borrowers who have both patience and fortitude can strike a loan arrangement with their bank by merely following the directions the banks give them. Some commonly asked questions: • What exactly is a loan modification? It is a permanent change in one or more terms of a borrower’s home loan, allows the loan to be reinstated, and results in a payment the homeowner can afford. • Can the lender include late charges in the loan modification? Per HUD, the accrued late charges should be waived by the lender at the time of the loan workout; this varies depending on the type of loan. But always request a complete breakdown and description of all fees and penalties from your lender. • Can the bank require an interior inspection of the property if they have concerns about the property's condition? Yes, the lender may conduct any review it deems necessary to verify that the property does not have physical conditions which might adversely impact the value. • How do I know if I will qualify for a loan modification? The top criteria your lender is looking at is your ability to make the new modified payment now and in the future. You’ll need to supply proof of income, along with a complete and accurate financial statement detailing your income and expenses to show them that if granted the modification, you will be able to afford the new, lower payment. • Do I have to be currently delinquent on my payments? Most lenders are now accepting applications from homeowners who are not currently delinquent, but who can prove to their bank that they will no longer be able to afford the loan payment under the terms of their loan. Contact your lender as soon as possible to start the loan modification process, regardless of if you are delinquent or not. · What constitutes a hardship? Everyone is different, but generally the lenders consider divorce/separation, loss of income, death of spouse, co-borrower or family member, illness, job relocation or military service to be acceptable reasons to consider a loan modification. A compelling hardship letter included in your application is a very important part of a successful application. · Will a loan modification help me stop foreclosure? Yes, that is the goal-by working with your lender to find a loan workout solution, your loan is brought current and the foreclosure process is halted. · Can my missed payments be added back into my new loan modification? Yes, the arrears can be added to the new loan balance and spread out over the term to allow the loan to be brought current. · How do I get started? Before contacting your bank’s loss mitigation department or a loan mod company, do your homework-learn as much as you can about the loan modification process so you can make informed decisions. If you suspect mortgage fraud, getting legal advice is crucial. However, a simple loan modification request is not rocket science. Mortgage loan veteran and Folsom resident Lyman King, of MetroCities Mortgage, admits that people get sick and tired of having to be the squeaky wheel. “The problem,” he says, “is that it will no doubt take 25-50 phone calls for the average person to get this ball rolling. Most people are not prepared for the unbelievable, endless runaround and are willing to pay attorneys or companies to do this because they give up trying to do it themselves.” Lyman also warns, “I would be very, very careful of hiring someone else to negotiate on my behalf, because every out-of-work loan originator and real estate agent has suddenly become an expert at this. Every day, people are being given bad advice — wrong advice.” Let’s face it. Once you make your initial phone calls to your lender to apply for a loan modification, the lender’s number ONE hope is that you will simply go away. But if you have the time, the heart and the patience to do this yourself, you will save thousands of dollars you could use on your new, modified and manageable house payments. Thanks to’s Susan V. Gregory for some source information for this column. Folsom resident Dena Kouremetis is a syndicated consumer columnist, a professional writer, speaker and trainer. She may be reached at