I have had so many people call me with terrible Loan Modification stories.  Many of them have exhausted their efforts and become short sale clients.  Today I would like to ask the people to call or email some of the good stories on Loan Modifications.  I can tell you lots of good stories about happy families with Short Sales.  Let’s get the email and phones going with maybe just a few good stories of loan modifications where the family was given an affordable solution and enabled to stay in their home.  I am not being feseshish.  I really would like to hear at least a couple good stories.  I am sick and tired of the negative ones.

 

I want to share with you a story just last Thursday from a distressed homeowner.  A family owns a home as their primary residence in NC.  The area is a beach town and the predominant ownership of real estate in this area is as a second home.  This guy got behind 60 days on his mortgage because his business had cratered due to the economy.  He contact his lender asking for assistance with the intent to stay in his home.  He submitted a raft of paperwork and had to wait for 60 days.  At the end of the 60 days the lender said, “Harrah, you are eligible for a loan modification”.  He was relieved but then there was more.  The lender said, “before we can offer you a loan modification we have to have you complete a four month period of forbearance.”  I call this the stress test.  The homeowner was paying over $4,000 per month on his current mortgage and having trouble.  The lender, and I might ad a TARP recipient, required that he make a payment closer to $5,000 per month for a complete four months before a loan modification could be finalize.  This wasn’t the best news but the homeowner saw it as a credible option to stay in his home and keep his family situated.  He made the four consecutive forbearance payments. He took money form every nook and cranny to make it work.  Finally the forbearance period was up.  He called his lender repeatedly and received no response.  This went on of a couple weeks.  Finally with the tenacity built up he got through to his lender.  What do you think they said?  You are not going to believe this.  They told him that he may have been eligible for a loan modification at the time before forbearance but that he wasn’t eligible now.  He was told that he could not be helped and that he was pretty much on his own.  If he falls too far behind the lender stated they were going to foreclose on the property.

 

This story is real and there is no glamour in telling it.  We decided not to even take on this homeowner as a short sale client because the second homes are not moving in the area and we felt that we would only add to his misery.  This guy is stuck and his lender screwed him.  Now you see why I am asking for someone to share a good experience about a person or family with a loan modification.  I am not making this stuff up.  I think the government programs are nonsense to date.  The large banks that received TARP are supposed to be helping people.  The only thing they are helping is themselves. The TARP money is cheap for the short term and they are leveraging it to their favor.  Alls Wells that ends Wells.  Nice earnings report fellas.

 

My point is once again that the government is going to save the free markets and you are clearly on your own.  This is an example.  Where is the accountability to the lenders for such shenanigans?  This is none.  The lenders talk the talk and their CEO’s act out on television.  It’s a money game.

 

This type of story is important not because you shouldn’t attempt a loan modification to stay in your home, but because you need to have realistic expectations and be prepared if it doesn’t work out in your favor.  What should you expect with a loan modification?

 

You should expect a reasonable reduction in payment or a calculation tied to approximately 38% of your gross monthly income being attributed to your total monthly housing expense.  Total monthly housing expense includes principle, interest, property taxes, homeowners insurance, property condo fee or HOA, and PMI if applicable.  You must also be gainfully employed.

 

I would like to share with you one more story from a recent customer that just completed a successful short sale with our company.  We just closed a short sale and got approximately $240K forgiven for a family that desperately wanted to stay in their home.  They worked diligently and frankly relentlessly with their lenders to simply keep their family in their home.  They were on a crazy negative amortizing arm loan program.  They persevered through a complete six months of negotiations for a loan modification only to have their lender offer them a payment reduction of $200 buck per month in a take it or leave it fashion.  I am not going to go into the details regarding the hardship, but I will tell you it was clearly a qualified hardship that I professionally do not believe would be questionable by anyone.  Having said that, the family contacted us and we completed a successful short sale over a total period of approximately four months.  Where is the catch to this story and why is it so significant?  The homeowners wanted to stay in their home so badly that they told me that they would move back in and continue paying two weeks before closing the approved short sale if the primary lender would let them. 

 

This makes no sense to me.  I personally connected with both the husband and wife and I really feel like we did the best for them possible given the circumstances.  I am not sure when these stories will turn the corner with loan modifications.  Most if not all loan mods require you to be delinquent.  Now they are saying with the new government programs that is not necessarily the case.  If you want to stay in your home definitely fight the fight.  If you are not happy do not lose hope.  Do not say things that recent new clients have said like “I feel desperate”.  You are not desperate.  You are disappointed and humbled but you are not desperate and you have options.  You have lost the battle but the war has just begun.  We do not endorse loan modifications as a general rule because we don’t think the review process is fair.  Frankly I think lenders use it to size the clients up and prepare the collections department for offense.  I sanction the Real Estate Short Sale.  I use this with my team as a weapon.  It’s fair and there is pain and benefit to go around but you as the distressed homeowner have a fighting chance.  These are my words and I am passionate about the take down.  When you think or feel desperation come visit me a www.thenegotiatedsolution.com an take the Free Trial Video. 

 

Blogging from the front line of the housing crisis.

 

GHunter

Submitted on Wednesday, April 15th, 2009 at 6:44 pm