11/25/2017

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Are You Frustrated With The Loan Modification Process?
by John M. Roberts

The loan modification process has frustrated many homeowners who are having trouble paying their mortgages.

Many people who are behind on their mortgage payments are beginning to see that banks, mortgage companies, and other lending institutions are slow in making loan modifications. Their programs are long and complicated ordeals that leave many homeowners frustrated and unsure whether they will ever be able to modify their loans and keep their homes from going into foreclosure.

At first, loan modification plans and the ability to get the necessary help sounded simple and easy to get through, but as everyone is finding out, many lenders have been reluctant, if not steadfast in their unwillingness to hurry the process along. This has turned into a long running nightmare for people who are in trouble with their mortgages and it is understandably frustrating.

The blame game is heating up because people are losing their homes within the premise that a home modification loan will help them avoid foreclosure, and they want some type of relief. But who do you blame, the government, the banks and mortgage companies, or yourself for getting in trouble in the first place? There is enough blame to go around.

To be fair, we know that the money is there because President Obama has allocated around $2 billion in loan modification funds to help those in need. Organizations that give loans, the banks, savings and loan associations, mortgage companies, and other lenders are not holding back on purpose and are not facilitating the slow pace in which modifications are taking place.

Instead, it has a lot to do with volume and uncertainty. The number of defaults on real property is very high, and more and more people are finding it hard to make their mortgage payments due to the state of the economy, which is causing layoffs, business closures, and increased bankruptcy filings. With so many people out of work and unable to make their mortgage payments on time, or at all, it is creating a backlog for lenders.

Some lenders are not even equipped to process loan modifications or they have just begun to understand the program. Since loan modification is a relatively new phenomenon, banks have had to hire people who know and understand how the loan modification process works or they have to send their current employees to school how to do them, which takes time and money.

On top of that, when loan modifications were first announced to the public, the government didn't have the necessary guidelines in place to allow lenders to get a jump start on the process. This has been one of the main causes of delays and concerns and since loan modification guidelines have been issued, there has been some important revisions that has caused even more delays.

Things have gotten so complicated that attorneys have jumped into the game and are now offering their services, for a fee, of course. You can see their ads on billboards and their commercials on television and on the internet.

To make matters worse, bogus companies have sprung up in many areas, promising to help people get through the loan modification process, only to take their money and give little or no assistance, or to disappear with their clients money altogether. Law enforcement agencies are actively investigating such companies, shutting them down, and prosecuting those who are caught manipulating people with bogus services.

Loan modifications, as provided under H.R.5579, the Loan Modification Act of 2008, your lender will require you to show enough income to qualify. If you qualify, your loan will be reevaluated and rewritten and then you must be able to prove that you can make your payments in the future.

There are a number of criteria that must be met before a qualified loan modification or workout plan is implemented.

  • The Loan Modification Act prohibits the causing of a negative amortization of the loan.
  • It prohibits the requiring of the borrower to pay additional points or fees.
  • It must improve the ability of the borrower to avoid foreclosure.
  • The agreement must also provide a regular scheduled payment that is reasonable for that borrower.

If you are under the threat of foreclosure, you already know that this is a serious matter. If you are not having success modifying your loan through your lender, you may want to seek the advice of a loan modification attorney, but be careful of scam artists. To be sure, even some attorney's are scam artists so be careful who you deal with.

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