Loan Modifications Don't Work....

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Get the Right Help With Your Loan Modification

 

More than half (55%) of loans modified in the first nine months of 2008 were 30 days or more late within six months, according to the Office of the Comptroller of the Currency (OCC) mainly because people attempt to do them with the customer service rep that calls them asking for a payment. Customer service reps are instructed to tell you either you do not qualify for a modification, they are not doing modifications or offer you something that is ultimately not in your best interest. Mortgage and servicing companies are only interested in collecting payments, in other words their "bottom line", not yours.

The following are examples of what mortgage companies are offering as "loan modifications", please be aware this list is a compilation of what is not a true loan modification.

  • Modified loans often carry higher balances than the original loan...
  •  ... and higher monthly payments, too.
  • Despite modifications, many homeowners are still underwater.
  • Mortgage companies offer homeowners unaffordable terms

Because navigating the system is difficult homeowners give up the fight at the first offer they receive. It is important to understand that this is really best handled by a professional. There are many negative notions given about firms that charge for this service and some of the negativity is warranted.  However any time you consider spending money on any service you should investigate and do your due diligence.

The fact is most companies that offer the service for free give you exactly what you pay for….NOTHING.  The same is true for most companies that charge. The key is finding a reputable company that uses an attorney network. Also do not believe the hype that the salesman gives, always check for third party documentation, i.e. magazine or any kind of press, "documentation beats conversation".  Beware of companies that don't take you through a pre approval process, not everybody qualifies for a loan modification. Get a money back guarantee in writing that accompanies a contract. Lastly, see if they can provide you with audio testimonials, so you can hear the sincerity in the voice of the person giving the testimony and not just the written words.

If you follow these steps you have a higher probability of getting a true modification that works for you and your household.

Failure Rate 

When People Try Modifications on Their Own

Comptroller Dugan Highlights Re-default Rates on Modified Loans

WASHINGTON - Comptroller of the Currency John C. Dugan said today that new data shows that more than half of loans modified in the first quarter of 2008 fell delinquent within six months.

"After three months, nearly 36 percent of the borrowers had re-defaulted by being more than 30 days past due. After six months, the rate was nearly 53 percent, and after eight months, 58 percent," the Comptroller said in remarks at the Office of Thrift Supervision's National Housing Forum today.

Mr. Dugan spoke during a panel discussion with OTS Director John Reich, Federal Reserve Board Vice Chairman Donald Kohn, FDIC Chairman Sheila Bair, and Federal Housing Finance Agency Director James Lockhart.

A key question, Mr. Dugan said, is why is the number of re-defaults so high? "Is it because the modifications did not reduce monthly payments enough to be truly affordable to the borrowers? Is it because consumers replaced lower mortgage payments with increased credit card debt? Is it because the mortgages were so badly underwritten that the borrowers simply could not afford them, even with reduced monthly payments? Or is it a combination of these and other factors?"

That question "has important ramifications for the foreclosure crisis and how policymakers should address loan modifications, as they surely will in the coming weeks and months," the Comptroller added.

His remarks also provided a preview of the second OCC and OTS Mortgage Metrics Report to be published later this month. The report will show continued increasing delinquencies and foreclosures in process for all first-lien mortgages held by the largest national banks and federally-regulated thrifts. However, the report will show new foreclosures decreasing by 2.6 percent from the second quarter.

The mortgage metrics report covers nearly 35 million loans worth more than $6.1 trillion, or about 60 percent of all first-lien mortgages in the United States. The quarterly reports are unique in that they are not merely surveys, but instead consist of validated, loan level data using standardized definitions for prime, Alt-A, and subprime mortgages, and standardized definitions for loan modifications.

"We believe the reports include the most accurate and reliable data on mortgage performance that is available today," Mr. Dugan said. "And in addition to providing more clarity about mortgage performance generally, the data have proven to be exceptionally valuable for supervisory purposes."

The Comptroller's complete remarks are available on the OCC's Web site.

Related Links:

Remarks Before the OTS 3rd Annual National Housing Forum (http://www.occ.gov/ftp/release/2008-142a.pdf)
OCC & OTS Mortgage Metrics, Overall Redefault Rates (30+ days) (http://www.occ.gov/ftp/release/2008-142b.pdf)
Comptroller of the Currency John C. Dugan (http://www.occ.gov/dugan.htm)

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Take the guess work out of loan modifications like; "do I have to be delinquent or current". Get a professional on your side!!

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