Loan Modification Questions

[onthebrink]

I want to look into loan modification as a first option before I consider filing BK. I have been told it is extremely difficult to get a loan modification if one has filed for BK. I have two questions:

1. I have been told that you significantly increase the probability of getting a loan modification if you have missed a few payments. We are current but are thinking of not paying our first & second mortgages the next 2 to 3 months as a means of preserving cash. I am currently unemployed but have a lucrative consulting project for which I can start seeing some income in April. Based on current monthly income, we cannot afford to pay our mortgages, CC debt and living expenses without depleting our savings. Do you think it is a good idea for us to stop paying the mortgages? What about the CCs?

2. I have also been told that you have to pay $3K up front to get someone to do loan remodification. Is this true? I thought they could only charge you if they actually got you the loan modification.

Thank you!

[325Falcon]

Run as fast as you can from anybody that wants to charge you for a loan mod!

[DeadManCrawling]

There is nothing another company or attorney can do that you cannot do yourself.

I would recommend staying AWAY from anyone offering a mod for a fee.

There are nonprofits, like NACA, who work on mods for no fee. Their track record is mixed. But, so is the track record of the whole mod program to begin with.

I would suggest reading some of the mod stories at http://www.loansafe.org/forum/ before proceeding. This will give you some insight into the possibilities and difficulties you face. Not saying it is impossible, by any means, but it is not easy.

One thought I will leave you with: Some folks have been approved for a mod. Then they send in 5-6 months worth of payments totaling many thousands or tens of thousands of dollars.

Then, one day, they wake up to a foreclosure notice on the door, or even a sheriff who has come to remove them. What has occurred is this: When they applied for a mod, they agreed, in the small print, to waive notice of legal action. So, the bank took the money and foreclosed anyway.

In other cases, the banks took the money for months and then sent a disapproval letter, either rescinding the mod, or claiming the mod was never approved in the first place. In some cases, the people have in hand signed copies of the mods, sent by the banks.

The banks do not refund this money.

These stories are, unfortunately, rather common, and something you need to be aware of.

[dasmom]

I have spent too much money on lawyers trying to negotiate a modification or fighting the foreclosure action. I can't tell you which way to go, but after 15 months of waiting, asking, submitting the same financial information multiple times I am moving forward with my life. I finally got a modification denial letter from the bankster (oh, I mean lender ) this week.

Crazy thing is I have had more than sufficient income to make a mortgage payment since 2008 but the bank chose not to accept my mortgage payments. After all this time, I don't care. Calls from the bank's collection department are a nuisance, so I don't plan to answer them anymore.

Just know that the process you are starting can be pretty lengthy and can still end with a denial. Also know that fees and interest keep racking up the longer you go through the process, so you may end up owing a lot more than you expected by the end of the process.

Good luck with your decision.

[onthebrink]

Thank you everyone for taking the time to provide your input/advice. I met with a firm today that specializes in loan mods. They came referred by people I trust who had a positive experience with them. They only collect based on a successful mod. My sense was that these people genuinely cared about helping people get out of difficult mortgage situations. They are going to contact the bank in the next couple of days. We'll see what happens and will let you know. I will make sure to bring up some of the issues DMC brought up.

[DaisysMom]

Oh my...I wish I had seen this before. I have a mortgage with GMAC and was behind on payments. They were in the process of foreclosing and I called them. I asked for loan mod and they send me a packet of what I should send in.

I followed the instructions....sent in everything they needed....called EVERY THREE DAYS to check the status....and in 21 days I was modified. They took the arrears and any legal fees they had accumulated and put them at the end of the mortgage. Lowed my interest rate and reinstated the loan.

This cost me nothing and I did it myself. I know there are alot of horror stories out there, but I think not enough of the successful stories are being posted because they have been resolved and the homeowner moves on and doesn't post them.

I wish you luck and hope you are successful with your mod. Whether you do it yourself or get help...it is the end result that matters!!!

DM

[Lajazz947]

Oh my...I wish I had seen this before. I have a mortgage with GMAC and was behind on payments. They were in the process of foreclosing and I called them. I asked for loan mod and they send me a packet of what I should send in.

I followed the instructions....sent in everything they needed....called EVERY THREE DAYS to check the status....and in 21 days I was modified. They took the arrears and any legal fees they had accumulated and put them at the end of the mortgage. Lowed my interest rate and reinstated the loan.

This cost me nothing and I did it myself. I know there are alot of horror stories out there, but I think not enough of the successful stories are being posted because they have been resolved and the homeowner moves on and doesn't post them.

I wish you luck and hope you are successful with your mod. Whether you do it yourself or get help...it is the end result that matters!!!

DM

Thank you for posting this.

I am with Wachovia and I have been sending in the requested info for months.

They always seem to need something else and that's why I call in every three days or so.

Finally today someone actually called ME to tell me that they were missing the last piece of info and then they noticed that I had spoken to them earlier this mornign and had already refaxed the paperwork.

The woman said that the main reason why the bank denies Mods is becasue of lack of sufficient income or missing paperwork.

I am so extremely on top of it that they have no choice but to at least review my application because it is all there.

My income falls in line with what they are wanting to be able to modify the loan and they TELL me that they have been very successfull with their MAP program so while I try to stay grounded I want to think that I am in decent shape.

I am saving the money anyway just in case I have to buy back the delinquency which would hurt.

They said it could take 2 weeks as they are reviewing my file now.

I will keep you all posted, we ALL need some good news here.

[onwards]

Oh my...I wish I had seen this before. I have a mortgage with GMAC and was behind on payments. They were in the process of foreclosing and I called them. I asked for loan mod and they send me a packet of what I should send in.

I followed the instructions....sent in everything they needed....called EVERY THREE DAYS to check the status....and in 21 days I was modified. They took the arrears and any legal fees they had accumulated and put them at the end of the mortgage. Lowed my interest rate and reinstated the loan.

This cost me nothing and I did it myself. I know there are alot of horror stories out there, but I think not enough of the successful stories are being posted because they have been resolved and the homeowner moves on and doesn't post them.

I did the same with GMAC a year ago. Took a little longer - about 6 weeks start to finish - but I got my loan modified from 5/1 with a 7.25% rate to a 5/1 with a reset on the date (so new 5 year period) with 4.1%.

I have submitted new paperwork to GMAC for a HAMP mod a week ago (we're literally at the point that getting a HAMP loan will finally - finally! - balance our budget). We'll see what happens.

[onthebrink]

I met with the company that specializes in loan mods last week. I was referred to them by someone I trust who in turn was referred to them by someone he trusts. They seemed very knowledgeable and felt confident that they could get our monthly payment reduced by over $1K per month. This would give us some breathing room.