Anonymous asked in Business & FinancePersonal Finance · 1 decade ago

What are the advantages of using a mortgage loan modification company over doing it yourself?

My payments are unsustainable and I need to deal with it or I'll be dealing with a foreclosure soon.

4 Answers

  • Anonymous
    1 decade ago
    Best Answer

    Hey Niel,

    First and foremost let me advise you that I know what I am talking about. I worked directly for Countrywide Home Loans in the Customer Service department and loss mitigation (the department that handles your inquiries, and the department that handles loan modifications). After that I worked as a loan officer for that company for three years. Following that I was laid off and continued to do home loans for local brokers, then now I work with an attorney's office and do loan modifications. What I'm trying to say is, I know what I am talking about.

    One thing I can say is this, do NOT listen to the guy who posted the first comment. Doing nothing is the worst advice you can possibly get. I'm going to try to explain the differences (This might be lengthy and would be way easier to do over the phone but here goes, I'll try to keep it short).

    You could elect to do the modification yourself, however you as a consumer do not really know what you are doing. The bank is not your friend and in the end is still looking after it's profit margin. They will guide you through the process and ask for your financial information like they would for a refinance and ask you to submit a hardship letter. From that they would come back to you with an offer if you qualified (after months usually, by the way). At that point they usually say take it or leave it, and rarely do any further negotiation. I usually put it like this....if you wanted to see if you qualified for an additional tax deduction, would you go to a CPA, or would you go the the IRS directly? get the picture.

    When you go with a modification company you are working with a company who does this every single day. They know what they are doing, and they know what to say to banks. The majority of the time, when they call the bank, they don't even speak with the same person you would speak with, most companies which are backed and supported by attorneys go and speak directly with the people who MAKE the decisions, not the middle man representative that you speak to. The company is also professional loss mitigators and the company is going to collect your information just as the bank would, and create a financial profile for you, then plead the hardship case to the bank. In addition, if the deal is a bad deal initially (and believe me I've seen tons of those) the modification company will go back to them and re-negotiate for a better deal. Basically, a modification company will be able to do more for you and get you a better deal.

    So how do you choose a modification company then? What you need to do is be careful. Because of the economic situation there are a lot of scam artists out there. You hear some people say "never go with a company that charges up front" I'll be the first to say that's too overcautious. I would say "don't go with a company that does not have a money back guarantee that you sign in writing." If you want to take it to another level in security, then do it with an attorney's office, they have the most power anyway because if it comes down to it they can audit your loan origination file and try to find a mistake made by the lender (believe me, almost all loans generated from the middle to the end of the boom have a technical mistake during the origination process). If this is the case they can threaten litigation against the lender in our favor, that's called a "forensic audit" on your loan.

    In addition, a "Federally backed loan modification program" does not exist. Loan modifications are NOT new. They have been around since loans first started. All a loan modification is, is a business decision made between you, the lender, and the investor, to change the terms of your loan based on your financial situation. The only reason they are so popular now versus before is because before the fall of the real-estate market, almost every modification request was denied simply because it made no sense for the lender and investor to do it. (i.e. You bought the home for $150, experienced financial owe $135,000 and wish to modify....The lender looked at the books and sees the home was now worth $220,000...and they decide to foreclose on you and re-sell to make money instead of give you your modification). However, NOW the investors are in a position where they are LOSING money if they don't do anything, and lose MORE money if they take the home back, so therefore they are GRANTING loan modification requests.

    I hope this helps you, there's a lot more to it that I can't really type out but I think that this gives you additional knowledge about the process and answers the initial question that you raised. Feel free to contact me if you have any additional questions or concerns and i'll be happy to help you out.


    Source(s): No internet sites to reference. My knowledge in real estate.
  • Jay P
    Lv 7
    1 decade ago

    Do not listen to anyone who tells you do nothing and stop paying your mortgage. This is really terrible advice. It is better to be an active participant in a solution rather than sit back and hope that the banks backlog won't catch up with them.

    If your payments are unsustainable you have a couple of options but the bottom line is that either you need to make more money or do something about the mortgage. There are two mortgage options. Call your bank and see if they have federally backed mortgage modification program. Some banks are working with homeowners to avoid foreclosures and actually modifying balances and rates. You could luck out. However, if you simply borrowed too much money and can't pay it back, you are unlikely to get relief there.

    You could try ot negotiate a short sale with the bank. Basically, find a buyer for your house for as much money as you can get in the market. Then you need to negotiate with the bank. They may accept a payoff on the mortgage that is lower than the balance due as long as they are reasonably certain that they could not get more for it if they foreclosed on it.

  • Tim J
    Lv 6
    1 decade ago

    Dont bother with the loan modifications companies out there... They are mostly worthless...

    As far as what to do... Depending on your financial situation, my advice would be to stop paying and save. Considering the backlog, it probably will be at least 12 months before they actually foreclose. By then you should have been able to help rebuild your finances and be in a great position to rent a similar house...

    Secondly... Always respond to bank requests, but do so right at the limit date (28 days typically). This back and forth communication can buy you allot more time than you think... In fact, for some people it is buying them almost 3 years..

  • 1 decade ago

    The first thing you need to know is a loan mod company cannot do anything you cannot do yourself. They only advantage to hiring a legitimate service is they may have more knowledge than some homeowners. Consider it as hiring a housekeeper, you pay the for there services and the time it saves you. The downside is there is alot of scam companies out there and nowadays its becoming more difficult to tell the good from the bad...

    Lets face it though nobody will work harder to save your home than you! If you do decide to do it yourself be prepared for alot of research, waiting, and lengthly phone calls to your bank. Once you understand the loan mod process you will see how easy it can be done. Download my Free DIY Loan Mod Kit from the link in my resource box if you want to learn more...

    Source(s): Get your Free DIY Loan Mod Kit
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