Top 3 Loan Modification Misconceptions
Posted by Veronica Davis on Monday, June 7th, 2010 at 4:09pm.share the Houston Real Estate Blog!
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In its heyday the internet turned a great many novices into do it your self experts. Now, not everyone can manage this, and many who attempt to do so get burnt. This is because a great deal of the information floating around on the internet is not really put up by experts on the subject. Over enthusiastic bloggers, ill-informed journalists and penny a word article writers have flooded the cyber world with an incredible amount of data. A lot of the data is misleading or inaccurate – and at best not very helpful.
This is particularly true with the issue of loan modification. The ongoing economic crisis, with its record numbers of loan defaults and looming house loan foreclosures, has made this a subject dear to many hearts. Many defaulters anxious for a solution are turning to the internet for serious answers to their problem. But this can be like looking for a needle in a haystack.
It kind of amounts to asking an armchair critic to play the role of a sporting star; for how can any one who has no hands on experience in loss mitigation provide practical solutions? Therefore, most people seeking info about loan modification through the internet end up with the wrong information and a lot of misconceptions.
Reworking of loans and loan modifications is being done in record numbers, yet it is only the educated home owner who can take advantage of what is offered. If saving your home is the name of the game for you, it is best that you consult an expert. To get started though, let’s look at some of the misconceptions out there and the actual truth behind them.
Misconception #1
You must be late on your mortgage payments in order to become eligible for loan modification.
The Truth
You can be eligible for a loan modification at any time. However, not many home owners have the foresight to try it before they actually land in trouble. Such cases are therefore very rare, and tough to win. Don’t get me wrong, there are numerous cases where people have tried to get a loan modification before they defaulted and won. Be ready for months of phone calls, emails, etc… to win though.
INSIDER INFO:
One of the best ways to eliminate all the red tape and get your way is to get an audit or legal review of your mortgage/loan document. Should you discover any legal violations in the document by the lending or servicing agency, you would find yourself astride a cloud with silver linings, with a golden crown atop your head to boot!
This is because these violations are likely to have occurred in hundreds of other loans they have made –after all, this is how they really make their pie. And they don’t want you going to court to clear the way for a mass attack on them once the ruling is public!
Sounds like black mail. But Heck No. It is all very legal. You can bet 99.99 % of the time your lending or servicing agency will buckle down and give you far better terms than the ones you expected!
Misconception #2
People who are late in their mortgage payments and owe more than the house is worth can easily get principle reductions.
The Truth
Only partially true. This is possible, but extremely rarely. Normally this is only possible where the person concerned has taken a first, as well as a second mortgage, and the second mortgage is settled 10 to 20 % per dollar. A reduction in principal is unlikely on the first mortgage, unless you have the golden key i.e. threat of court litigation - preferably backed by legal violations on the borrower’s loan.
The lending and servicing agencies just don’t have any other options. They would be mad to start offering principal reductions in every case. Just think of the tens of millions of home owners who would become entitled to this with the present drop in housing prices.
So don’t fall for the scammers who claim they can get you a principle reduction in every case. As I said before, such a thing is an exception and not the rule. It is impossible on the first mortgage except for when it’s the result of litigation based preferably on legal violations on borrower’s loans.
Misconception #3
Everything possible is being done for the defaulting home owners by the lending and service agencies.
The Truth
This is a load of rubbish. All the talk about assistance to defaulting home owners is mere lip service. How can the very guys who sold to the people all these thieving mortgages in the first place suddenly become saviors? The very people who created this crisis, swindling the many to help the few, have now mysteriously developed a soft heart for their victims? No way.
The only thing they can be expected to do is to look after their own survival. They will therefore do the minimum necessary to avoid a complete loss of faith in the banking system; hence the lip service.
For a start they - haven’t even deployed the minimum manpower required for the job. They have laid off employees by scores of thousands every month. These were the ones who sold the million of bad loans in the first place. Now that these loans have gone bad and millions need immediate help with their mortgages, how many qualified employees are left to process the requests?
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This guest post was contributed by Veronica Davis, a freelance writer covering an array of real estate topics. She’s also a feature writer for real estate and loan modification websites.
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Share10 Responses to "Top 3 Loan Modification Misconceptions"
Is Loan modification the same as "Refinancing". I think the misconception exist because of lack of information. Everytime you turn around, you get a different answer
Posted on Monday, December 27th, 2010 at 6:35 PM.
It seems to be getting harder and harder to get approved. I know a few people in California that can't get them ( or I should say they are not finding people to help them ). This is a huge challenge since many people don't have time, energy or resources to accomplish. Congressmen are making laws and not thinking ( as usual ).Florida Loan Modification
Posted on Tuesday, December 28th, 2010 at 9:22 AM.
I read your all 3 misconseptions and agree with you. Thank you for sharing your experience with us.
Posted on Monday, January 10th, 2011 at 6:18 AM.
Great post. I heard a stat the other day on NPR that less than 18% of homeowners are getting a loan modification. Just goes to show that you need all your ducks in a row if you want to get the payment reduction you need. Starts with a great audit.
Posted on Monday, January 10th, 2011 at 6:21 PM.
Loan Modification is a sign of hope for people with low income or reduced incomes. There are different options available to homeowners to avoid consequences of Foreclosure. Obama's loan modification plan is a great step by current government. Thanks
Posted on Saturday, February 19th, 2011 at 9:19 AM.
Not many loan modifications seem to be successful in Idaho. I'm hearing of a few after many many months of persistant pestering and paperwork but the norm is rejection unfortunately.
Posted on Wednesday, February 23rd, 2011 at 11:03 PM.
The ongoing economic crisis, with its record numbers of loan defaults and looming house loan foreclosures, has made this a subject dear to many hearts. Many defaulters anxious for a solution are turning to the internet for serious answers to their problem. But this can be like looking for a needle in a haystack.
Posted on Thursday, March 3rd, 2011 at 2:53 AM.
Misconception #3 is a very good point. Those evil lending service agencies only care about their asses.Los Angeles Self Storage
Posted on Monday, March 21st, 2011 at 11:00 PM.
I agree, this loan modification misconceptions are killing the industry. People need to be educated. Not only ones looking for loan modifications, but i know of people who tell these misconceptions and pass them as truth! Orlando Doctors
Posted on Monday, April 11th, 2011 at 10:09 AM.
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I had a client tell me the other day that they were being rejected time and time again for this. Is it true you can modify you loan? I hear in the news that you can, but it seems like the lonely ol Joe is SOL. He wanted more info, from me, a Napa DUI Lawyer what am I supposed to know? Oh well, I found your site and sent it off to him. Hope he finds what he's looking for.
Posted on Monday, November 15th, 2010 at 2:56 PM.