Paladin Legal Center Loan Modification Attorneys

Loan Modification Information:  Fact or Fiction?

The United States is facing very significant challenges on from nearly every direction, and the economic situation is very scary for many Americans .  Everyone is affected.  Most of us know someone in danger of losing their home.  Foreclosure?  Send your bank your keys ?   Catch a fast plane and skip town?  What do you do?  Who do you trust?  What is the truth?

For many people, the first and most suitable option is a loan modification.  A loan modification is sometimes called a mortgage modification or a home loan modification.  Although it sounds clear enough --  a modification to your mortgage agreement, typically to make the monthly payments more affordable -- there are a lot of misconceptions and false information circulating about what a Loan Modification actually is and what is can do for you.  A lot of people enter loan modifications with serious misconceptions, and end up making the wrong decisions, based on inaccurate information.

As the market for mortgage assistance grows, the number of misinformed homeowners is also growing.  How do you tell Fact from Fiction?  Can a loan modification really stop foreclosure and solve all your mortgage problems? The guide below explains some of the most common myths about loan modification, and what the actual truth is.

Myth #1:     You can do it on your own.

FACT:  Technically, you can--but it takes a lot more work and the results probably won't be the same.   The Loss Mitigation Department is one of a bank's busiest departments right now; a typical loss mitigation officer is handling as many as 800 cases at a time. These bank employees are overwhelmed and underpaid and do not have time to deal with your problem specifically and resolve it effectively. It's not uncommon for a  loan modification request to be passed from one agent to another, and never get any real answers. A loan modification attorney, on the other hand, can talk directly to your lender which will result in significant leverage to get your file to the top of the agents' stack. When a lawyer represents you, the calls get returned faster, you get more personalized service, and you gain the capability to actually obtain the type of loan you can need.

Myth #2:     Your lender would rather foreclose than modify your loan.

FICTION:  In some cases, foreclosure is the more practical option. But according to an industry study group, lenders lose substantial money with every foreclosure, and are required to increase their reserves in addition. The banks already own too many foreclosure properties and have too many non-performing loans on their books. They would much prefer to adjust your mortgage to something affordable and convert your loan into a performing asset. Don't be intimidated by threats of foreclosure.
 
Myth #3:     You can't stop the foreclosure process.

FICTION:  It's true that your chances go down the longer you wait, but until your home is auctioned off, no one can force you out. A loan modification or initiating a lawsuit against your lender/servicer can stop the process even seven days before the sale date. This buys you enough time to get back on your feet while your lawyers work out a better arrangement with your lender. Of course, it's always  better to start the process early.

Myth #4:     Loan modification is an instant solution to mortgage problems.

FICTION:  Loan modifications really work, but they take time plus the right expertise, and money. Depending on how far behind you are, the process can take anywhere from one to several months. But since it stops the foreclosure process, you won't have to worry about losing your home while the modification is under way. If you submit your paperwork on time and cooperate with your lawyer, you can speed up the process and avoid complications.

Myth #5:     You need good credit to qualify.

FICTION:  Standard requirements will vary from lender to lender, but the bottom line is that the loan modification needs to make financial sense to your lender/servicer. Your credit rating doesn't have anything to do with it. Your lender will want proof that falling behind was a temporary snag, and that you can afford to stay on track if they modify your loan. This means you have to have a job and a valid proof of hardship. You don't need to disclose your credit rating in most circumstances

Myth #6:     Loan Modification companies are scams.

BUYER BEWARE:  The loan modification industry is exploding right now, and most of the people claiming to be specialists are simply ex-mortgage brokers and real estate agents who are taking advantage of a new opportunity to earn a fee.   In many instances, the “specialists” don’t know what they are doing or have any real experience, and in some cases they are actually defrauding their clients by taking fees and not doing any work at all !
In any business there are always some unscrupulous people, but you can find legitimate organizations that will help you. The important idea in loan modification is to work only with an experienced and knowledgeable law firm and an attorney who has a track record of success. You should thoroughly check on the background of anyone who claims to be able to do a loan modification before you spend your money.

FACT:  Paladin Legal Advocacy Center is an attorney firm with more than 35 years of real estate and legal consultancy experience.

Myth #7:     Loan Modification companies can guarantee payments and can guarantee rate reductions.

FICTION:  There is no way to know what the exact payment or rate will be.  You should be aware of any company who offers these types of guarantees. 

Myth #8:    You can get a guaranteed reduction on the principal.

FICTION:  Banks want to work with the payment structure and amounts first to keep you in the existing loan.  While principal reduction is possible, to guarantee it is setting unreasonable expectations and is often told to clients in order to earn a fee.  These actions are emblematic of an unscrupulous company.  Beware!

Myth #9:    Loan Modifications have been around for years.

FICTION:  No.  This is a new strategy in response to our trying economic times.  During the 2008 presidential campaigns,  much attention was focused on how to get the economy to recover.  It became obvious that stopping the downward spiral of the housing market was key.  Thus, the term “loan modification” or “home loan modification” or “mortgage modification” became popular in mainstream media.

Myth #10:    Ninety-five percent of all loan modifications are successful when an attorney negotiates on your behalf with the bank’s attorneys.

FACT:  Legal representation increases your loan modification success rates dramatically.

Myth #11:    The US Government, your state senator, your state representative, or government-sponsored mortgage assistance organizations can help you.

FACT…BUT…:  Although it is possible for these publically funded agencies and individuals to help you, you must remember that these offices are very overwhelmed and will include a lot of bureaucratic red tape.  You can test this yourself by calling your senator or representative or by going to Hope Now, the FDIC, FHA Secure, Home Ownership Preservation Association, or any number of programs and just see what results you get.

Myth #12:    You must be behind on your mortgage payments to qualify.

FICTION:  Depending on your bank guidelines, you may be able to perform a loan modification without being late.  If we perform a forensic audit of your loan documents and find a violation of TILA or RESPA, etc then you are entitled to file a lawsuit against your lender whether you are late on your mortgage payments or not.  We are finding that 80% of the time there is a legal cause of action to initiate a lawsuit that will give you more time in your house or to rehabilitate your personal finances, and likely result in a loan modification as the settlement to the lawsuit.

Myth #13:    You can make ONE CALL and get your loan modified.

FICTION:  It takes many months of persistent calling, negotiating and reminding.  Employees are underpaid and overworked.  Loss mitigation specialists at the lenders and service companies are handling up to 800 cases at once.

Myth #14:    I can hire someone to perform my loan modification for free.

FACT:  Anything is possible. There are many government organizations exist that are willing to help you complete portions of the process.  If you are getting help with the loan modification process for free, just remember:  Usually you get what you pay for!  On the other hand, if you are paying for a loan modification service, be mindful of the old rule:  Buyer Beware!  Be sure you investigate the company to ensure they are experienced and honorable.

Myth #15:    Second homes do not qualify for modifications.

FICTION:  Many types of property, including second homes, vacation homes, and even investment properties can qualify for loan modification.   It is likely however, that a successful loan modification on an income property will require that you sue your lender and then agree to a loan modification on your terms as the settlement to the lawsuit.

Myth #16:    HOPE NOW and 995-HOPE protect your interests.

FACT:  While these organizations have been established to help homeowners, they only go so far and most people get lost in the process.  When facing a foreclosure process, it is best to hire an attorney to help you negotiate your case with your lender.

Myth #17:    Once the loan is modified, your worries are over!

FICTION:  Rebounding from a financial speed bump is a process.  Rebuilding your credit, and regaining your emotional and financial stability are all key steps in this process and must be addressed in order to allow you to be back in control of your world.  As long as you handle your financial comeback well, your loan modification is a badge of courage, not of shame.  You’ll be stronger and much better prepared to handle future curves that life may throw your way.

Myth #18:    A loan modifications is the answer to all of your problems.

FICTION:  A loan modification may be the answer, but each case must be analyzed in detail.  The economic state of affairs for you and your family is very unique and must be addressed as such.  Paladin Legal Advocacy Center offers the service of analyzing your case and personally informing you of the various options available.  Call us today at: 888-PLAC-911  and set up an appointment for your personal evaluation with one of our attorneys.