LOAN Modification continues to be the hottest thing these days as distressed homeowners try to save their home from foreclosure. If you are about to apply for a loan modification with your lender, perhaps you’re wondering what your chances are of getting approved. What if the lender turns you down? Is there enough time to do it before your property is sold at a foreclosure sale? If you are trying to do it on your own without professional help, you may be at a disadvantage in dealing with your lender if you don’t understand the process and don’t know what you are doing.
Most people who work from 9-5 also find it difficult to even communicate with their lender because the time they can commit to doing it is so limited. Doing a loan modification involves a lot of phone calls to your lender, filling out forms, analyzing financial documents, waiting on hold for long periods of time and more often than not, dealing with lender representatives who are poorly trained and just as confused as you are about the process. In other words, it could be very frustrating to a lot of people so they simply give up.
In this article, I would like to discuss a few of the most common mistakes I see that people make that often lead to failure and frustration. Most of these are plain common sense but are often overlooked. Here they are:
Mistake no. 1: lack of preparation before contacting your bank: Don’t just pick up the phone and call your bank without first preparing what you are going to say and what information you are going to provide. If you are doing this without an attorney, arm yourself with knowledge and understand exactly what your bank needs to get your loan modification request approved. This means reviewing your current loan documents, understanding the terms and figuring out what modifications are needed to make your loan affordable. You should have a goal and a strategy in dealing with your lender to maximize your chances of success.
Mistake no 2: paying a large fee to an attorney or a loan modification company without knowing what to expect: A lot of people have come to our office saying that they’ve paid thousands of dollars to an attorney or a company without even knowing what services will be provided, what they can expect during the process and what the consequences are should the attempted loan modification is unsuccessful. Beware: There are a lot of unscrupulous people out there who are only interested in taking your money without looking after your best interests. Know what questions to ask before hiring anyone and make sure that they are operating in compliance with the law.
Mistake no 3: not having an acceptable financial hardship to qualify: These days, a lot of people simply want to "jump on the bandwagon" and do what everyone else is doing- even though they can afford their current mortgage payment based on their income and expenses. They’ve heard that banks are modifying loans and their property is "upside down" so they must be qualified for some type of loan modification. Remember that a loan modification is an alternative to foreclosure and the bank will do what is in their best interests, not yours. They have to be convinced that unless they modify your loan, you have no other recourse but to surrender the property. Your reason must be compelling and documented.
Loan modification is not for everyone but it could be a viable option for people who qualify. In some cases, it may be difficult or impossible. If you have been denied once, usually you can also re-apply if you can show that your circumstances have changed. Review the information you previously submitted that caused the denial in the first place and figure out what adjustments have to be made. Additional supporting documentation may also be necessary prior to resubmitting.
For a free office consultation, please call Toll-Free 1-866-477-7772. We have offices in Glendale, Cerritos and West Covina.
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None of the information herein is intended to give legal advice for any specific situation. Atty. Ray Bulaon has successfully helped over 4,000 clients in getting out of debt. For a free attorney evaluation of your situation, please call Ray Bulaon Law Offices at TOLL FREE 1-866-477-7772.
( Published on August 22, 2009 in Asian Journal Los Angeles p. C2 )
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