Welcome to The Truth About Loan Modification

Welcome to The Truth About Loan Modification. The purpose of this Blog is to help consumers lean the truth about loan modification companies and various lenders’ policies with respect to loan modification. I hope that this blog can be a form for readers to share their experiences good and bad with respect to their own attempts to obtain loan modification either on their own, through a loan modification company or though an attorney.

When it comes to information many consumers have a huge disadvantage. When faced with a loan modification offer the consumer cannot tell if the offer is good or bad because they have no standard of comparison. Our firm has seen countless homeowners who hired loan modification companies that did absolutely nothing other than take the homeowner’s money. In some cases when the lender was contacted by the homeowner the lender told the homeowner that it had never received a single call or letter from the loan modification company. Other loan modification companies have gone through considerable efforts and their clients, now in foreclosure, will come to us with pages of letters and call logs detailing the efforts of the loan modification company. Unfortunately diligent efforts often do not lead to a loan modification offer or lead to a proposal that offers little real savings.

One client of ours had two mortgages (a $250,000 first mortgage and a $75,000 second mortgage) on a condo that had fallen in value from $350,000 at the top of the market to $210,000. The homeowner had not paid their mortgage in six months. After a foreclosure action was filed by the lender, the loan modification company obtained an offer for modification that would roll the arrearages (from not paying for six months) into the loan and lower the interest rate from 7.95% to just under 7.5% on the first mortgage and lower the interest on the second mortgage on the second from slightly over 8% to slightly over 6%. I saw the loan modification proposal and told the homeowner “this is a joke.” Given that the first mortgage holder had filed a foreclosure action if that action went to completion (something our firm is fighting to stop), the first mortgage holder would obtain the property which is worth less than the balance on the first mortgage. If a deal is not reached and the foreclosure was completed the second mortgage holder would get NOTHING. Nonetheless the loan modification offer obtained by the loan modification company (something our client paid over $1,500.00 for) did not have one penny of principal (loan balance reduction) on either mortgage. If the property was put up for short sale it would be expected that the first mortgage holder would get almost all of the short sale proceeds and the second mortgage holder would get $1,000.00 to $2,500.00 because that is better than their alternative of getting nothing in a foreclosure.

If you have had had an experience good of bad with a loan modification company or loan modification lawyer, feel free to discuss it in the comments section of the blog or send an E-mail to truthaboutloanmodification@gmail.com. In future Blog posts I will post links to consumer complaints and state attorney general actions against loan modification companies that take homeowners’ money and never lift a finger to obtain loan modifications. I am hopeful that can build a database to compare modifications from the same lender. Armed with the knowledge of what a lender has done on other loans consumers can ask the bank for similar concessions and provide the lender of the details of similar modifications the lender has made in the past. Given that lenders often use multiple loan servicing companies it is normal for the left hand of a bank to have no idea what the right hand is doing.


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