Apply and negotiate loan modification yourself? (PMI, loan officer, fixed rate, interest)

[cke73]

I'm curious if anyone here has applied and negotiate loan modification with the lender yourself? Do you think it's worth paying a licensed mortgage broker $2k (Up front, flat fee, no guarantee and no refund) to do this? Here's my current situation, I have 5/1 ARM interest only loan and next adjustment is August 2010. No default and I have excellent credit. The property is currently upside down and is not my primary resident (currently rented out). I just want to be ahead to get a fixed rate before next adjustment date. Response from anyone here who has experience with loan modification is greatly appreciated.

[NYLATINQT]

No, you should keep your $2000. You can apply yourself. It's actually a very simple process. The biggest hurdle is communication because most of the employees that work for the banks are morons. I think it also depends on who the lender is. If you have a subprime loan, you will need a lot of patience. That being said, you have to start what's called a "workout" with the loss mitigation dept. They basically will ask you about your financials (income vs. expenses), and you will need to write a hardship letter. Since you are not behind, you may get the runaround. I suggest you find out whether you have a Fannie Mae or Freddie Mac loan. If so, look into the "Making Home Affordable" program. They have 2 parts, one is a refinance program and the other is a loan modification program. The catch is that it is designed for primary homes only. I had read somewhere that they were going to add something to the program for 2nd homes, but I can't find the email on that. Most mortgage companies have stuff on their websites that give you information about the different loan mod programs. That's where you should start. Generally speaking, once you submit your application, you can expect to wait up to 2 months for a response. They are just totally backlogged. How do I know this? I am a housing counselor and this is what I do all day long. Good luck.

Making Home Affordable - Home

[Debsi]

Have you talked to a loan officer at the company that has your current mortgage?

You might be eligible for a refinance without an appraisal. You try to get a refi to lower your payments before you try to get a loan modification.

[cke73]

Thanks nylatinqt and dbsi for your responses.

I have Countrywide (now BOA) and have called them and they said I'm not qualified for the MHA Program because loan to home value ratio does not meet their requirement and my payments are still current. If I recall correctly, they said my home value needs to lose greater than 55% of what I bought it for and be on default status in order to be qualified for MHA program . I'm currently losing close to 50% that I don't see it recovered back at all and I'm not qualified... LOL

The loan mod specialist from the licensed mortgage company I spoke to asked me a few questions about income vs expense, calculated the number and told me that I'm a perfect candidate for loan mod. I was also told that there are no lender fees from loan mod which is different than refinance where lender fees are charged. Can anyone confirm this?

Also, would the bank more likely to approve or deny loan mod if you have savings in the bank? Or do they just care about current income vs expense?

It does sound like I'm gonna have to call Countrywide back to ask for loan mod department. Any other things that I should be aware of given the situation?

[Debsi]

NO lates in the last 12 months is a requirement for a MHA refinance. They're telling you the opposite?

What was your original LTV? Do you have mortgage insurance (PMI)?

[cke73]

Well, I assume that when I ask them to check my qualification for MHA, they should be checking all programs in MHA to see which one I'm qualified for. So, that's what I was told. I guess what they meant was, you are still able to pay your bill, so no help for you.... I have auto withdraw setup so the bank is never late to get their money. It's also paid down 20% thus no PMI. It seems like all "others" get the stimulus benefits except those play by the rule....

[batmanaz]

I applied myself, you do not need to pay anyone. There mostly scaming people. My bank declined because I was payng on time. I called back and mentioned that I am on a ajustable rate and it has recasted, and the value has dropped. Now there looking at it again. If they say no to u they will say no to the scammers ur paying.

[VictorBurek]

Are you aware that if you do a loan modification your credit scores will drop dramatically. Here is a link to an article from bloomberg.com that covers this, Cheaper Mortgages Spark Lower FICO Scores for Payers (Update1) - Bloomberg.com

Also, do a google search of loan modification lowers fico.

[Leavethetable]

cke73:

If not already done so, I would attempt the negotiation yourself...save the 2,000 bucks. I recently went through the process with Wells Fargo. I am in a similar situation as you except the home is my primary residence. To add to waht others have posted regarding credit impact, I specifically asked Wells how a modification will effect my credit. They stated that as long as you continue to make your payments and are current through the entire process, that nothing negative would be forwarded to teh credit agencies. It should appear as a re-fi and a loan change. Again, this is what Wells stated and not necessarily how future creditors would look at it. However, Wells was adamant about not reporting anything negative as long as the mortgage is current.

[Modification Specialist]

Let me throw in my $00.02

If you loaned $1000 to someone, they were going to pay back $100 per month over the course of a year. A few months go by, then they want to make smaller payments, and stopped making the payments all together. What would you do in a situation like that?

I work for an national mortgage law firm doing loan modifications - when I read posts from people that are confusing the issue rather then helping, and then others read it, makes me want to set the story straight. Yes there are many scammers out there, but for every one scammer there are ten good people that can help you.

Everyday I see work and the amount of effort it takes to get a modification on a loan. A year ago it took around 5 to 8 weeks, now it takes 4 to 6 months to complete a modification. For people with multiple properties (rentals), can take up to 9 months. Our litigators are on the phone 8 hours a day, either on hold for hours, or negotiating a lower payment to help a homeowner with a hardship.

What state a person lives in can determine how fast a lender works with you, either Judicial or Non Judicial. Judicial states can take approximately a year before they can foreclose. Non Judicial states can be as soon as 120 days.

Each state in the U.S. handles it’s real estate foreclosures differently, it’s important to understand those differences and know your specific state’s procedures. The terms used and time frames vary greatly from state to state, but the following information provides a general overview of the different processes and considerations.

See link Foreclosure Procedures by State

That me say - every case is different. For someone to say - "Oh I just got a good modification from my lender", doesn't mean everyone else can do the same thing. There are so many variables - it is impossible count them all. Yes, there are general guidelines, but each case is different.

If you can negotiate with your lender, and receive a modification in your favor. Consider yourself pretty lucky. In actuality, when people negotiate with their lender, the modification is mostly going to benefit the lender. Frankly they want their money.

First - if you work with a person to help you modify your loan. New rules as of April, only attorney firms can legally take money up front for loan modifications. If you are contacted by a modification company with no affiliation to a law firm and ask for upfront payments, they are probably operating under the radar.

Do you think it's worth paying a licensed mortgage broker $2k you ask? It depended on the outstanding balance. The fee should be held in an escrow account until the completion of the modification. Which is 100% refundable if no modification is awarded.

You wanted to be ahead to get a fixed rate before next adjustment date. The majority of completed modifications are now coming back with ARMs, interest rates as low as 2% for the first four years, then 1% increase each year after. These type of situations are for people that had below 7% before hand. On the other hand I am see people with higher rates - example a couple in Florida coming form 9.5% adjustable, into 5% fixed for the life of the loan.

Your question about no lender fees from loan mod which is different than refinance where lender fees are charged. Can anyone confirm this?

I have worked in mortgages for eight years, and over the last year helping people out of bad loans, next to saving their homes. The answer to your question about loan fees, I assume someone was referring to no closing costs added to your principle. Take for example a $200k refi + 5% closing costs = $10k added to the principle. On a loan modification the legal fee is $1995, not added to the principle, but is three monthly payments of $665.

As for the comment NYLTINQT - you can go to Fanny Mae or Freddy Mack websites to find out if your loan is held through them. If so you might qualify to lower your payment to 31% of your income (OBama Plan). But if you have a subprime loan, chances are it is not held through them. Again one shoe does not fit every size.

Your statement that you were disqualified because of your value. Your lender was trying to put you into the Obama plan. It seems they are helping you, what they are not telling you that for every homeowner they put into this plan, they get a yearly kick back from the government. If they can't get any money, they are not going to approve you. Per the OBama plan to guidelines are very tight, you either qualify or dont.

Due to the rules of this forum, cannot list our firm. If you have any further questions PM me.

Good Luck...


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