Loan Modifications vs. Forbearance Agreement?

Regarding Loan Modification and Michael G's answer. His answer was not a Permanent Loan Modification, he was describing a Forbearance Agreement.

Lender's will negotiation permanent loan modification, but you need to be careful. The bank will always do what is in their best interest first and a forbearance or temporary modification will be in their best interest, not necessary your best interest.

I recommend that you work with a reputable professional. You need to be careful however because, unfortunately, there are people out there that don't know what they are doing and taking advantage of people.

Loan Officers and Realtors can not accept money upfront for their services and their fee schedule for loan modification services needs to be approved by the Department of Real Estate. So if someone asks for money upfront or makes promises that sound to good to be true. Find some else to work with and better yet, report them to the Department of Real Estate.

The best thing is to work with a professional loan broker that is affiliated with an attorney. They are out there. Ask for references and check them out with the DRE.

You can, of course, do a loan modification with your lender yourself, but I believe it's better to hire a professional, you don't want to repeat the same mistake. AND if you have a loan officer that put into a bad loan to begin with, don't repeat that same mistake either. Find someone that knows what they are doing.

2 Answers

  • Anonymous
    1 decade ago
    Best Answer

    Lender's will seldom if ever will negotiate a true loan modification. But they will offer a forbearance and new payment schedule, in a hardship for example. The caveat...all interest will be due at some later date or upon payoff. Servicing agents sometimes misrepresent one for the other - a modification & forbearance. But the difference is in the offering. A [permanent] modification is for all intents and a purpose is a new loan that renders the deed voidable. The prior loan is expunged from the record.

    All this is typically done due to some compelling cause such as a declaratory judgment and threat of action or settlement in lieu of an action, mediation or even as an order by the courts.

    A forbearance agreement will always require some method of recovering the interest accrued to date whereby it is added to the already unaffordable payment. The promise to lower your payments later, is no commitment but a "maybe" upon the bank receiving all back due payments. It's another highly deceptive tool in a lender servicing agent’s arsenal of larceny.

    The answer above is correct about the need for a professional. But you WILL NOT GET ANYWHERE WITH AN ATTORNEY OR DRE GENIUS unless you can substantiate the lenders need to remedy a problem caused by THE LENDER AND OR ITS AGENTS. This is something you will find likely based upon a discovery of any errors and omissions, negligence or fraud committed at settlement or during the servicing or your loan. Therefore you should get the file audited by a professional examiner who is qualified to underwrite and determine acceptance suitability and proper compliance using RESPA, TILA and GSE guidelines.

    The findings then even the playing field and allow you to negotiate a modification with a caveat . . . your loan is rescindable!


    Source(s): (My Underwriter)
  • peadon
    Lv 4
    3 years ago

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