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One of my latest articles suggested that the best advice you can get on loan modifications is free and supplied by  the Government and that the Government has a vested interest in loan modifications to work, that is to stop families from losing their homes. This elicited an anonymous comment that I feel can be helpful as I believe it touches on many of the issues people are thinking about. The comment is copied in full even though some of the sentiments expressed may have hurt my fragile ego. The readers’ comments are in italics.

“The best advice comes from the government and they have a vested interest in your success.” Really?  The best advice comes from the government????  Based on the terrible advice that you are giving I can believe that you may actually believe this but that does not make it true. 

Yes, I agree Obama wouldn’t lose sleep over me foreclosing on my home, but I do think he wants this credit crisis to be behind him, to get re-elected and because most people like to do well in a job, few of us like to fail miserably. This does not mean I think he will succeed. I personally believe the whole problem we have now is not so much a mortgage issue, as a credit culture crisis. In many cases mortgage payments are one of the smaller loans borrowers have to worry about. Think credit cards, car loans, refinance mortgages, etc…

The government is not littered with the sharpest minds in America.  It is a bunch of people who are trying to get re-elected. Do you really think they are looking out for my best interest?  Did you ever stop to think that the banking lobby has the politicians in their back pocket?    When you call HUD all they do is give you the number at the bank to call and answer some basic questions.  Wow, what a great service they provide. 

Again I would have to agree that not all government employees have a Mensa membership card in their wallets. And yes, I am sure the banking lobby has plenty of leverage on this government, just look at how quickly the Government bailed them out when they needed it.

However HUD does provide more information than your banks number. Foreclosure prevention counseling services are provided free of charge by nonprofit housing counseling agencies working in partnership with the Federal Government. These agencies are funded, in part, by HUD and NeighborWorks® America. There is no need to pay a private company for these services. http://www.hud.gov/offices/hsg/sfh/hcc/fc/

However if you feel it is all a big conspiracy and that all these counseling agencies are out to get you and don’t want to help you with your mortgage then it might be a good idea to get your own loan modification “guru”. You know what though? Not all of them are the brightest minds of America either.

Politicians tell people not to use loan mod companies because the banks don’t want people to help them out.  Wouldn’t it be great if the person that was suing you for something was representing them self and you had a great attorney to help you out?? 

Have you ever spent 6 months getting the run around from the bank while you stress out over the possibility of losing your home?  Who has the time or mental energy or mortgage knowledge to negotiate with the banks?  Do people know how to calculate their DTI or surplus/deficit?  Did you know that most lenders have guidelines that are based on the monthly surplus/deficit and if you give them numbers that fall outside of those guidelines at any time during the 3-6 month negotiations or during the 3-6 month trial modification you will be DENIED?   

Can you imagine how somebody would feel if they went through hell for 6 months and then when they went through the final financial review after the trial mod they got denied because they got a bonus check or saw their income dip or had an unexpected expense pop up?  Who is going to counsel them on how to manage their finances throughout this process and hold their hand in a great time of need… the government….yeah right.  At least they have your great articles to fall back on.  If you truly want to help people please educate yourself on what you are writing about before you start writing.  Which bank do you work for?

I think the key of the issue is that our friend feels (for completely altruistic reasons I’m sure) that loan modification agents are the way to go. We are too ignorant to work it all out ourselves, and the Government is not to be trusted. That is a feeling many share, which is why they will pay thousands of dollars to a loan modification agency to do the work for them.

It is true that for many of us the paperwork required is just too much to deal with when we have work, family and a hundred other things on our mind, but just because you pay for that help doesn’t mean it is going to be better.

The truth is that nobody can really guarantee you anything. Loan modification agencies can’t guarantee success, although they do have vested interests in delivering the goods, because it is the bank that approves or drops the loan modification application.

You need to decide if loan modifications are worth the trouble at all, some just see them as a trick banks play to get 3 extra months out borrowers.

You also need to decide if paying for a loan modification agency or using a free government issued counselor is the smart thing for you.

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3. Loan Modification Help: Get Your Loan Modification Approved

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Loan Modifications have been put forward as the great savior of the current credit crisis. Whether this is true or not is a matter of debate. I personally feel that dealing with a credit crisis by trying to fix mortgage issues is not going to deal with the big picture.

Nevertheless it is a fact that many are benefiting from the taxpayer subsidized loan modifications that are being grudgingly supplied by banks and other mortgage providers.

However many are not benefiting at all from this service, what is worse many have considerably worse off because they tried to get a loan modification and bumped into a scam artist or organization that duped him out of the little money he had left. Nobody wants to become a statistic, especially when it is the number of borrowers that are conned out of their homes by dishonest “loan modification consultants”.

What can you do? Here are 6 easy steps:

1)    Know the beast. Understanding what your options are and who qualifies for aid is vital. Reading www.blownmortgage.com and other mortgage help articles will provide you with inside information about loan modifications and mortgages. Other websites that should be on your list are: WWW.hud.gov www.makinghomeaffordable.gov and www.financialstability.gov . In fact wherever you go for help make sure it is free. The best help out there on loan modifications is, believe it or not, is free.

2)   Beware and be alert. If you are struggling with your mortgage you are a prime target for scams, recognize and avoid common scams.

3)  Avoid fast loan modifications. Companies who want you to sign papers immediately or who claim they can save your home if you sign of the deeds of your house to them are scam artist. Nobody can save your home except you and your mortgage provider. Organizations and individuals can provide valuable information but they can’t guarantee anything because they don’t make the decisions.

4)  Again, DO NOT sign the deed of your house to anybody unless you are working directly with the mortgage company to forgive your debt. In other words only sign off the deed of your house if you are selling it back to the bank.

5)    Only make mortgage payments to your bank. A common scam is for a “consultant” or loan modification company to ask you to pay them so they can deal directly with your mortgagee and make the payments for you. As you probably guessed this payments stay in the pockets of the scam artists while you get deeper in debt.

6)  Don’t pay anybody for advice on your loan modification or for counseling services on a delinquent loan. This is not to say they are all scam artists but even the kosher variety or not as good as the organizations that provide free counseling as a public service.

Related posts:

1. Loan Modifications, lies, scams and misinformation
2. Creative Ways a Loan Modification Lowers Your Monthly Payments
3. Loan Modifications and FHA Refinance What Is The Deal

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Loan modifications are complex animals not because the concept behind them is complicated but because of all the elements that compose it and the various options and permutations of these options that must be decided. The jargon linked to loan modifications can also make it a challenge to understand the instructions you read in the literature.

This series of articles “Loan Modification Questions” is designed to clarify some of the most important questions you can ask yourself about loan modifications as well as busting some jargon by using plain English to explain what your options are.

Loan Modifications are based on a simple concept to renegotiate a loan or mortgage in order to provide some advantage or benefit to one or both of the parties. The loan modification the government is now backing is designed to allow struggling borrowers that have some form of income and can pay their mortgage if their monthly payments are reduced, their late fees are waivered or some other modification is carried out.

One of the ways this is carried out is to capitalize or include in the loan modification costs or fees the borrower must currently pay on top of his monthly payments.

Can a mortgagee capitalize an escrow advance for Homeowner´s Association fees when using a loan modification option?
The answer is yes. HUD Handbook 4330.1 REV-5, Paragraph 2-1, Section B under Escrow Obligations states: Mortgagees must also escrow fund for those items which, if not paid, would create liens on the property positioned ahead of the FHA insured mortgage.

In other words the FHA insured mortgage must have first rights on the loans security, the house. For this to happen pending fees and costs must be capitalized into the mortgage.

Interest Rates.
One of the reasons the government is pushing for loan modifications is so that homeowners whose homes have dropped in value can benefit from the current lower interest rates. Is there a new basis interest rate which mortgagees may assess when completing a Loan Modification?
The answer is again yes. Mortgage Letter 2008-21 explains that the new basis interest rate is 200 points above the monthly average yield on U.S Treasury Securities adjusted to a constant maturity of 10 years. This links the interest rate applicable to loan modifications to Treasury Securities.
An important issue when applying for a loan modification is that the loan modified is the primary loan. Will HUD subordinate a Partial Claim, if a mortgagor (the borrower) subsequently defaults and qualifies for a loan modification?
Yes, HUD will subordinate a Partial Claim if a mortgagor defaults and qualifies for a Loan Modification.
These are just a few of the questions you are probably dealing with if you are searching for a suitable loan modification. The best advice is to ask for free advice from a government institution and ask what your options are.

Related posts:

1. Loan Modifications Questions: escrow analysis, unemployed homeowners and upfront premiums.
2. Loan Modifications Questions: Fees, Inspections, Late Charges And Other Concerns
3. What To Look For In A Loan Modification

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Loan Modification Scams are high up in the priorities of the administration and public authorities. Loan Modification Scammers target some of the weakest members of our society, charging high fees for services that either are not carried out or offers no help to the ailing economy of the desperate home owners.

In the  last months we have seen a number of institutions and AG’s hit loan modification scams throughout the country. The most recent AG to threaten and attack loan modification scammers is John Kroger, Attorney General of Oregon.

Attorney General John Kroger said that Oregons Financial Fraud and Consumer Protection Unit has “opened more than half a dozen investigations” into loan modification companies, two of these loan modification companies received a sanction.

How do these loan modification scams work?

The secret is to target the weak. Homeowners so desperate they will do anything to reduce their monthly payments and save their home. Loan modification companies and consultants will send official looking documents and cold call home owners they know are struggling with their mortgage payments.

This is not to say that all loan modification companies are useless. Some do provide valuable information and help clients make sound decisions with their home. However many use deceptive measures to dupe potential customers. For instance some loan modification companies will send paperwork that will make it look like they are associated with official government organizations like HUD o HAMP. Don’t let them confuse you. Only the bank can approve your loan modification and the government will not contact you through covert methods.

One of the largest loan modification companies, National Homeowners Assistance Services Inc. was also charged with using illegal and covert measures to receive payments they did not work for. In order to set things right the National Homeowners Assistance Services Inc. company was asked to pay $4,000 in legal costs besides changing their code of practice. These measures are designed to force loan modification companies to improve their standards of client service. Another measure some states are trying is demanding upfront bonds from loan modification companies of around $100,000 as a type of license and security for any problems the companies cause to borrowers and other citizens.

Whatever measures the government takes nothing can substitute common sense (not so common unfortunately). Make sure you use reputable companies that are truly experts in loan modification. There have been so many loan modification companies popping up like mushrooms that it seems impossible they are all experts.

Another giveaway for a loan modification company you want to keep away from is unreliable promises. Companies that promise and guarantees the loan modification of your dreams as long as you are willing to pay a “small” fee. These fees tend to be enormous making many homeowners get deeper into debt without getting any results.

Related posts:

1. California trys to deter loan modification and foreclosure rescue scams
2. Loan Modification Company Scams How to Avoid Them
3. Loan Modification Scams And Desperate Homeowners an Explosive Cocktail.

Related posts:

1. California trys to deter loan modification and foreclosure rescue scams
2. Loan Modification Company Scams How to Avoid Them
3. Loan Modification Scams And Desperate Homeowners an Explosive Cocktail.