Are You Paying for Your Loan Modification?

Henish Pulickal

September 19, 2017

Do not pay for a loan modification!!! It’s illegal for anyone (including attorneys) to charge you for a loan modification. Keep reading to find out more . . .
I meet with several people every week who are in a distressed situation. This could mean that they haven’t paid their mortgage in a few months (or more) and have a notice of default or trustee sale filed against their property. In nearly every instance, people want to stay in their house and believe they have the means to afford their mortgage payment.
I believe you should get a 2nd (maybe even a 3rd ) chance to stay in your house. Everyone has a setback in their life at least a few times. This may mean you missed your mortgage payments for a few months. During this time the bank will be trying to contact you to figure out how plan on making the missed
payments.
Fortunately, all banks are now required to give you the opportunity to get a loan modification. A loan mod allows the bank to re-underwrite your loan and try to give you a payment option that works better for your budget. In many cases, that means adding the missed payments to the amount you owe total, dropping the interest rate temporarily and maybe even stretching it to a 40-year term. If and when a modification is offered to a client, the payment can often be higher than your payment was before the hardship occurred.
If you are expecting a drastically reduced payment for your mortgage with a  modification, you may want to adjust your expectations. Banks are in the business of making money. If they offer you a modification, it will be under the terms that still mean the bank will make money. I know there are occasions when the bank does offer a temporary lower payment option, but take a close look at the full
list of terms. Often, the bank will offer a lower payment, but that’s for the first 1-2 years. Then the payment will increase from years 2-5 so the final permanent payment is often higher than your payment before the modification. Read the fine print.
As I’ve said above, loan mods are a great tool to help you stay in your house. Make sure you have the right expectations and that a loan modification will provide you a long term solution to your problem. Meet with one of the experts at the CalHomeCo and we’ll help you review everything, work with the bank and give you the best opportunity for a successful loan modification.
One final word of warning: Do not pay for a loan modification! Anyone that charges you for a loan modification, before the bank gives you a loan modification is committing a crime! California law (and most other states) prohibit charging for a loan mod according to SB 94. Every week I read an article on another company being shut down by the authorities because they charged thousands of homeowners,
thousands of dollars for loan modification. The perpetrators are often sentenced to pay back millions in restitution and spend the next several years in prison. Even law firms are not above the law. Here’s a recent article regarding a group of lawyers that were caught under an enforcement sweet called “Operation Mis-Modification.”
This website explains common loan mod scams and has a lot of other great info.
Loan modifications can take a lot of time and having an experienced adviser can definitely improve your odds of a successful modification. CalHomeCo is affiliated with a real estate company and we believe that staying in your home is just as important as buying and selling a home. Contact us today for a completely free loan modification.

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