Loan Modification Scams Coming to Sacramento
December 29th, 2008 categories: Foreclosure, Loan Modification, Real Estate Tips
Opportunists who want to suck what little money you, the homeowner have left, are calling to HELP with a loan modification.
Are you having trouble paying your house payment? Many Sacramento homeowners are. If it sounds too good to be true, it is.
These scam artist are charging several thousand dollars to do what you can do yourself for FREE.
Yes, many of these people are real estate agents and mortgage brokers hungry for money. These are the same people who put you in the position that you find yourself in today. Don’t be fooled!
Those of us who are reputable real estate Realtors and Mortgage Brokers don’t take your money and make empty promises. The CA Attorney General has his hands full dealing with loan modification companies who are taking your money on this latest scam. Check out this video on how the sub prime mortgage burned the homeowner and how they are being burned again. Don’t become the next victim.
Nothing in life comes easy, you have to put forth the effort to help yourself. Don’t throw your money down the drain with these scam artists. It takes work on your part, so be prepared for the fight of your life.
Many will take your money and do nothing. Check out frequently asked questions about loan modification from HUD.
Call the bank that you pay your mortgage to each month. Tell them you want to stay in your house but can’t meet your payment. Ask for a loan modification. It won’t be simple. Dealing with the banks is not easy but keep at it. Keep your temper. You won’t accomplish anything if you aren’t sincere.
In order to qualify for a loan modification here are the qualifications you must meet:
- Your original loan date must be prior to December 31, 2007
- You must have an existing sub prime loan (fixed or adjustable) or Option ARM
- Loan to value ratio needs to be above 75%
- You must live in the house as your primary residence
- You must be employed
- Your mortgage payments must exceed 31% of your gross monthly income
Click here for a list of what constitutes a hardship and needs to be part of your hardship letter.
Although we keep hearing that the banks are doing modifications, many have not come on board yet. With the new year, and hopefully some stipulations on the bail out money from Congress, we will see more banks stepping up and securing loan modifications in 2009.
If you are unable to get a loan modification through your lender, a Short Sale is the next option to consider. This is when with the help of your Realtor, you put your home up for sale for less than what you owe on your loan(s). Short Sales are long and tedious but if successful will harm your credit for a lesser time than a foreclosure.
Another option is Deed in Lieu of Foreclosure. This is when you ask the mortgage lender that you pay each month if they will accept the keys to your property to avoid foreclosure. For further information be sure to read What is Deed in Lieu of Foreclosure?
Prepare the following papers which are needed if you are also going to list your house as a Short Sale, getting a Loan Modification or Deed in Lieu of Foreclosure.
- 2 years of W2’s (or letter explaining you are unemployed)
- Last 2 years tax returns
- Financial Statement listing assets and liabilities (stocks, retirement fund, 401K’s)
- Last 2 employer pay stubs
- Hardship letter limited to one page (Short and to the point)
Banks have taken their sweet time with Short Sales in 2008 but hopefully the banks have gotten wiser and realize that they are far better off to accept a Short Sale than to spend needless money and risk break-in’s with foreclosure. Let’s hope the banks are wiser in 2009.
See a few examples of hardship letters to get you started and tweak them to your own circumstance.
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Do you have any resources of a reputable sacramento based company that can help with my Loan Modification?
Robin,
The best advice I can give you is to contact the service provider that you pay your mortgage to and ask to speak with the loan negotiator that handles loan modifications. Anyone else out there would do the same thing but charge you money. Some banks also have what is called Short Refinance so that is another option that you might want to discuss with the bank that holds your loan(s).
You can do it but you need to be patient and ask for their help.
You offer some great advice Gina but negotiating a loan modification can be tricky as well. Many people disqualify themselves by providing the wrong information and not understanding what the bank is looking for. It’s easy to get discouraged. Finding someone to help can cost you money but so does an attorney or a doctor. You are paying for an expert to help you get the best deal possible. At a minimum – you should go to HUD’s website and find a free counselor. I’ve seen companies charge more that $3,000 up front and it’s way too much for the amount of work required.
Unfortunalty, there are many people that have set out to take advantage of people in need.
Here are a few things to avoid:
Don’t pay fees in advance unless it’s an attorney or a Broker on the DRE’s appoved list.
Don’t sign a Grant Deed – sometimes they slip one into the rest of the paperwork!
Don’t pay anyone your mortgage payment except your lender
Be weary of Guarantees – they will offer to give your money back if they can’t get you a loan modification but what are the terms? An adjustable rate at 8.5% to fixed rate at 8% is a loan modification and if you refuse to accept the terms you may not get your moeny back.
Your best bet is to find someone that charges for services completed. That’s how I do it. I charge nothing to show you how to negotiate with your bank, I charge $250 to prepare a full package to submit to your lender, and I charge $1,250 to negotiate on your behalf. If you don’t like what the bank offers – don’t take the deal and pay nothing.
It’s not my intent to use Gina’s Blog as advertising so I am not leaving my contact information – I just want people to see that not everyone is in it to take advantage of people.
A number of Mortgage companies and Bank have engaged in very deceiving attempt to foreclose on home owners without their knowledge.
Request for Loan modification filed by home owners as early as October 2008, are intentionally being prolong by this banks, in hopes the home owner can no longer catch up with payments resulting in the lost of their homes.
Most of these lenders have instructed and train their loan modification specialists to stall home owners when they call to inquire about modifications submitted over three months ago.
Once the home owner is caught up in 4 late payments, the same Loan modification specialist will attempt to forced re-finance on the home owner charging very high fees and interest rates.
It is very important to note, these very same banks recently received bail out money with our Tax dollars:
Max,
Unfortunately, you are right. Many of the banks operate that way right now.
That’s why it is imperative that the troubled homeowner not spend needless money on empty promises by those advertising they can facilitate the loan modification. Money down the proverbial drain in my opinion.
I have received comments here from people advertising themselves to do just that…a big no, no in the blog world.
If a bank won’t do a loan modification that works for the homeowner when they call their bank, no amount of money given to someone will make this come true.
One of the key factors in loan modification is not only the homeowner’s income but also whether or not the loan is simply serviced by the bank they are paying their mortgage to or if the bank OWNS the loan.
If the mortgage is simply serviced by the company the homeowner is paying than there will be NO MODIFICATION. This is key!
Norm,
I appreciate that you are not using this article to promote yourself. You offer sound advice to the consumer.
As you are aware if the income of the homeowner is not conducive to what the bank is offering, than it’s a mute attempt at getting a loan modification.
I have spoken to several banks that have actually approved loan modifications and found the recitative rate is high. Banks are not seeing this as a viable alternative. For those few that it does work for, it really isn’t something that they have to pay to get. However, if they don’t want to do the work themselves and talk to the bank than they need a professional and not a shark to get the job done for them.
Thank you for your input and valuable sources for the troubled homeowner.
Dear People Of The Greatest Country In The World:
Unfortunately this is the only country were people in control do not give any crap about
other people,but to take advantage of them.
We talked to our Bank,by the way Chase, because they bought Country Wide,but they said to get a modification or short refinance is not possible,because they did not received any help from the government.I got laid-off last year,we have been struggling to pay debts.So we are going to stop payments of everything,we do not see any other choice.Every one is looking for the opportunity to make money out of the people in problems.Is very hard to trust any body today.
Burt,
I hear you! This is the story that I hear most often. Even if the banks agree to a loan modification, from the ones I’ve seen they are not even realistic leading to just a matter of time to fail again.
Just today, I received a call from a homeowner who was granted a loan modification from Citi Bank for 3 months with a $7,000 balloon payment due in March…needless to say that was a waste of time!
Even with bailouts, the banks are not responding as they should. The bailout money is going toward them buying up other banks in trouble.
The scum of the earth are out there willing and able to fast talk you and take your money making empty promises or short term loan modifications that are not realistic.
Until and unless there are restrictions on this bailout money specifying help to the homeowner I think it’s a mute issue.
Let me correct a few things stated here about what is necessary to qualify for a loan mod…
- It is NOT necessary to have an existing sub prime loan (fixed or adjustable) or Option ARM
- The loan to value ratio does NOT need to be above 75%
- It is NOT necessary to live in the house as your primary residence (rental property can qualify)
- Your mortgage payments do NOT have to exceed 31% of your gross monthly income.
So who am I? I am an attorney and I have been doing loan mods since 2007. So far, I have successfully completed 208 modifications. I charge a FLAT FEE of $3,000 for a single mortgage and $4,000 for a 1st and 2nd. I have a 96% success rate.
Many of my clients have tried to negotiate with their lenders and I can tell you that in most cases this is a complete waste of time. Yes, it is true that some “self negotiated” mods do get completed. However, the terms of those mods are significantly inferior to those that could be negotiated by an attorney.
The comments on this blog that loans mods are “empty promises” and total scams simply do not understand. While it is true that there are companies taking advantage of people, you can not conclude that all mods are scams. Just ask one of my clients!
That being said, the most important advice I can give anyone having trouble with their is to see an attorney early in the process (you DO NOT have to be behind in payments to qualify).
I will not use this blog to advertise, thus no links to my website or other information.
95% of the people seeking “loan modifications” should just walk away instead.
Whether the loan is modified or not, you still eventually need to pay the principal back..for a longer time period.
You will still be underwater EXCEPT..
Most of the time you will be in worse shape as the modified loan will have a “Recourse Clause”
meaning if you just walk away later because you lose your job, for example, the debt will follow you to the grave.
The original loan had a non-recourse provispo, so if you walk away, the debt cannot follow you.
Are people really dumb enough to pay money for something that leaves them in worse shape than they were before?
As an attorney who has seen this many many times, I’m shocked no-one explains this to these people.
My advice..Get Smart…walk away.
That’s one of the reasons I am hoping that we give the bankruptcy Judges the ability to reduce the loan amounts for these troubled homeowners. The Judges have had the right to do this for 2nd homes and investment property and now it’s time to allow them to do the same for primary residences. That in my opinion, is the only way to stop the fall of the American dream now and in the future.
Hello,
I know that there are tons of companies charging upfront fees with for loan modifications and the reason that they are getting the money they are asking for is because it is sooo difficult to do something like this yourself. Going up against a billion dollar corporation by yourself is very difficult to achieve results with your best interest at heart. I do know of a company that does not charge an upfront fee for their services. Infinity wealth services. They realistically are one of the only companies in the country not doing so….. seriously check them out….
I am having my loan modified by a company becuse I dont have the time to spend onthe phone to do it myself. Also, if you do it wrong then you can make your situation much worse.
Large banks cannot and will not act on their own to substantially write down balances, due to the negative impact it will have if their investors decide pull their funds. Property values shall remain stagnant or steadily fall over the next several years, until aggressive action is taken by the Feds. A federal mandate should include a program to protect underwater homeowners, by offering incentive for them to remain current. Equity matching or protecting further loss of equity must be considered. Unfortunately, the nature of our system requires things to become much worse before drastic changes can be successfully implemented.
Randy,
Thank you for your insight. I certainly hope the Feds take more aggressive action. All we need is for a continuing sprial downward…this effects us all.
My husband and are both state workers that have had our pay reduced by 20% so far and maybe another 5% soon. We bought our home one year ago in July 2008. We bought it for 175,000. We were priced out of the market for many years and were so excited to get into this home that we love. We have affordable house payments, but with the paycuts that have come our way another 5% will send us over the edge. Bank Of America owns our loan and I was going to call them about maybe modifying our interest rate or our monthly payment. I had an appointment with a loan mod person on Wednesday. My question is, do you think we qualify for a loan modification? Our interest rate is 6%. Should I call them myself? Eventually with another 5% cut we will no longer be able to make our payment. If we miss payments will that hurt our chances of a loan mod? I am so scared to lose a house that we love. Any information you have would be so helpful!
Katie,
I sent you a private email last night. This is a rough time for so many and my heart goes out to you. Know that you are not alone and like I said in my email, give me a call and let me know what B of A has to say.
Take care.
I’ve ucceeded in getting a modification on my own but failed in getting something that was workable. My original monthly payment was 2900 and now reduced to a whopping 2700. One paycheck doesnt even cover this. Am thinking about contacting an attorney but with everything I’ve read, it seems I have a 50% chance of not getting anything better. Sigh.
Tony,
So sorry to hear that. Got your voice message and sent you a personal email. Good luck!