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2.
Loan Modifications.
You do not have to hire anybody to do a loan modification or
agreement with your bank.
If your bank wants to do a modification, it can be typed and
signed in less than a week.
We encourage all clients to try to work out an agreement
before the bank files a foreclosure case.
Here are some tips about modifications:
A.
Your loan modification should be in
writing. This
protects you and prevents any misunderstanding.
The terms of your note and mortgage probably require that the
agreement be in writing.
B.
Do not send the bank money until the loan
modification is signed by both you and the bank.
Many banks make a verbal promise that they will do a
modification if you send in payments for a few months.
These promises are non-binding because they are not in
writing. The final
result for many people is that the banks take their payments and
then proceed with the foreclosure case.
If you sign a modification agreement but the bank does not,
then how is the bank bound by the modification?
C.
Avoid “trial” or “temporary”
modifications - they should be permanent and should cover all
payments through the end of the loan.
Many banks do a writing that obligates you to make a few
payments under a “trial” or “temporary” modification without
obligating the bank to do anything other than to consider a
modification after you make the payments.
This agreement is also non-binding upon the bank.
The bank is not required to give you a permanent
modification. The result
for many people is that the banks take their “trial” payments and
then proceed with the foreclosure.
It is a great agreement for the banks because it lets them
take some more of your money just before taking your home.
Many recent articles in the press have highlighted this
problem. An article in
the Orlando Sentinel
stated that temporary modifications had been done for 650,000
mortgages but only 1,711 had become permanent.
D.
Typical modification requirements.
Most banks will not do a modification unless you have a
steady job with sufficient documented income.
If you do not have a job, if your income is too low, or if
your income is
Aunder the table and undocumented, then you are less
likely to get a modification.
E.
Your bank may not want to do a
modification with you.
When I worked for the banks, it seldom took more than a week
to write up a loan modification if the bank wanted to do a
modification. Today,
many banks simply do not want to do modifications.
F.
Reasons why banks do not do modifications.
The original bank may no
longer own your loan. If
another bank purchased your loan, they probably got it at a steep
discount. If your
original loan was for $250,000, the new bank may have paid only
$30,000 for it. If your
property is now only worth $150,000, the new bank can sell it even
cheaper after foreclosure for only $120,000 and still make a quick
profit of $90,000. They
can triple their money in a year by taking your home.
This is why the new bank ignores your request to modify the
loan to reflect the current value of the property.
If they do a modification, the payments may stretch out for
30 years. Why should the
bank accept payments over 30 years if they can triple their money
now?
G.
Keeping up appearances.
Congress has the ability to pass all kinds of laws to help
homeowners. This power
scares the banks. Banks
do not want Congress to pass such laws.
Because of this, banks must “keep up appearances” with
lobbying and a public relations campaign that says they are helping
homeowners with 1-800 help line phone numbers, workout packages, and
loan modifications. This
is called “window dressing”.
What is your bank doing?
Can you talk to a real human when you call your bank?
Does your bank respond to your letters and telephone
messages? Does your bank
delay by asking for more and more documents for your workout
package? Did your bank
give you a permanent modification in writing or did they just sue
you for foreclosure?
What does this tell you about your bank’s true intentions?
H.
You should not stop making payments on
your home just to get a modification.
Many of our clients were told by their bank that they had to
stop making payments before they could get a modification.
After they stopped making the payments, their bank filed for
foreclosure instead of doing a modification.
Then they had to hire our firm to defend the foreclosure.
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