Loan Modification

Table of Contents:

1. What is a Loan Modification?

2. Who qualifies for Loan Modification?

3. What are the benefits of Loan Modification?

4. What are the problems with Loan Modification?

5. Can the bank deny my Loan Modification after I have made the Trial Payments?

6. How do I avoid Loan Modification scams?

7. How can an attorney help with my Loan Modification?

8. How much will it cost for an attorney to handle my Loan Modification application?

What is a Loan Modification?

More and more homeowners in Miami, Ft. Lauderdale, and West Palm Beach are asking this question. Whether you call it a loan modification, mortgage modification, restructuring, or workout plan, it’s when a borrower — who is facing great financial hardship and is having difficulty making their mortgage payments — works with their lender to change the terms of their mortgage loan. The workout plan could result in temporary or permanent changes to the mortgage rate, term and monthly payment of the loan. The plan’s goal is to help the borrower reduce their monthly mortgage payments to 31% of their gross income. Under Obama’s plan, loan modifications will be standardized, with uniform loan modification guidelines used by Fannie and Freddie Mac, and then they will be implemented throughout the entire mortgage industry. For an up-to-date overview of modification and short sale programs currenty available, please visit an article I recently posted titled “Loss Mitigation Programs Overview,” or call (888) 886-0020 for a free consultation with a Florida Loan Modification attorney.

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Who qualifies for Loan Modification?

In an effort to continue to provide meaningful solutions to the housing crisis, effective June 1, 2012, the Obama Administration expanded the population of homeowners that may be eligible for the Home Affordable Modification Program to include: Homeowners who are applying for a modification on a home that is not their primary residence, but the property is currently rented or the homeowner intends to rent it;
Homeowners who previously did not qualify for HAMP because their debt-to-income ratio was 31% or lower;
Homeowners who previously received a HAMP trial period plan, but defaulted in their trial payments; and
Homeowners who previously received a HAMP permanent modification, but defaulted in their payments, therefore losing good standing.

If you are a homeowner who falls into any of these criteria, you may be eligible for a modification under the expanded criteria.

In the months and years since the first mortgage modification programs were introduced in response to the housing crisis, many terms, requirements, and procedures have been adjsted and expanded. Today, several programs are in place which may help borrowers modify their loans, and keep their properties. For an overview of these programs please visit an article I recently posted titled “Loss Mitigation Programs Overview.”

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What are the benefits of Loan Modification?

Loan modification benefits include (1) relatively minimal risk of damage to the borrower’s credit, (2) alternative to foreclosure, (3) loan modifications do not affect the neighborhood home values, (4) no legal proceedings, and (5) families get to remain in their homes and neighborhoods. Call (888) 886-0020 for a free consultation with a Florida Loan Modification attorney.

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What are the problems with Loan Modification?

The problem lies with servicers of loans. Most people don’t realize this, but when you buy a loan product, there are two parts: the servicing rights, or the company who collects the payments on the loan, and the actual owner of the loan. Given that many mortgages are in securitized mortgage pools, there may not be an actual owner of your note, but many investors who own a part of the mortgage pool. Servicers receive lucrative fees for collecting your payments, handling your paperwork and tracking your payments. Apparently, they too have an incentive to avoid working out problems with borrowers: higher fees. Call (888) 886-0020 for a free consultation with a Florida Loan Modification attorney.

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Can the bank deny my Loan Modification after I have made the Trial Payments?

In the early years of the housing crisis, many Florida borrowers entered in to what they thought were permanent mortgage loan modification agreements with the their bank. Most loan modification agreements, especially those entered in to under HAMP, require a 3-4 month probation period where the borrower must make the exact payment on time or they will be dropped from the program. After the trial period is completed succesfully, the loan modification is made permanent and the borrower receives a permanent modification agreement that is signed and executed. However, many borrowers discovered that these “trial periods” were not at all what they expected. Many banks had been agreeing to put borrowers on a “trial payment period,” often lasting up to 6 months and then denying a permanent modification of the loan, even where the borrower has made all payments on time and in full. The reasons for these denials varied but were seldom the borrower’s fault. These reasons include the bank setting up a trial payment that was unsustainably low and which the loan’s owner/investor would not approve; the bank “overlooking” some documentary aspect of the modification application; a change in policy; etc. Some banks had been soliciting “trial payments” that gave false hope to borrowers in foreclosure by proposing a seemingly arbitrary payment amount for an indefinite period of time that, at first glance, appears to be an offer for modification. However, most of these offers explicitly stated in the fine print that there is no promise or gurantee of obtaining any meaningful or permanent modification after making these “trial payments.” In recent months, and following several lawsuits and penalties from private and government entities, these problems have been corrected. Still, it is very important that all offers for loan modification be reviewed by a Florida Loan Modification attorney prior to sending any payments under the plan. My office offers complimentary reviews of these agreements and I encourage you to contact us with any questions. Call (888) 886-0020 for a free consultation with a Florida Loan Modification attorney.

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How do I avoid Loan Modification scams?

Loan modifications were created in order to offer the struggling home owner another option in dealing with the possibility of foreclosure. They are permanent changes in one or more of the terms of your loan. The most common changes include lowering the interest rate and payment, extending the number of years, adding arrears to the balance, and on very rare occasion, reducing the principal loan balance. However, as with most things that were created to help people, there are those self-serving, greedy individuals that prey on struggling home owners in the guise of being the savior for their home. Call (888) 886-0020 for a free consultation with a Florida Loan Modification attorney.

The best way to avoid “getting taken” is to perform proper due diligence before you pay fees to anyone for any service. There are a few easy steps you can take to decrease the possibility of feeling cheated in a loan modification service. First, make sure the company is a properly licensed law firm. Next, beware of services that guarantee a particular result. Finally, an important thing to remember is that as of October 2008, any non-attorney Florida business involved in Loan Modification may not charge you a fee up front; they may only collect their fee after the services have been provided. See Florida Statutes Section 501.1377. This means that if the company is offering you any type of Loan Modification assistance, they cannot collect any fees up front unless the company is a licensed law firm. Call (888) 886-0020 for a free consultation with a Florida Loan Modification attorney.

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How can an attorney help with my Loan Modification?

While it might seem like loan modification is something you can do on your own, you should seriously consider obtaining the assistance and guidance of a loan modification attorney. Lenders are more likely to take notice of your request to modify when they are dealing with a professional attorney.

When a loan modification attorney presents your loan modification application, he or she will be armed with all the documents and the right negotiation techniques. Lenders will take you more seriously when you have a loan modification professional by your side. Because they can use legal information as leverage, loan modification firms are substantially more likely to get a better offer than you can get on your own.

A loan modification is much like going to court: you can save your money and get a court-appointed lawyer, or you can invest in professional representation and get the best loan modification help. Mortgage modification won’t happen overnight, but if with a capable attorney, you can be sure you’re in good hands. The Law Office of Emil Fleysher, P.A. helps South Floridians just like you living in and near Miami, Ft. Lauderdale, and West Palm Beach obtain loan modifications that can help you stay in your home and avoid foreclosure. Call (888) 886-0020 for a free consultation with a Florida Loan Modification attorney.

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How much will it cost for an attorney to handle my Loan Modification application?

The Law Office of Emil Fleysher, P.A. typically charges from $1,900 – $2,500 to prepare, submit, and negotiate residential Loan Modification applications. Please answer the following questions to receive a quote and preliminary analysis from the attorney within 24 hours…