CALLER: I have to re-schedule our appointment for a consultation because my friend says that I might be able to get a 2.5% rate with my lender and that he could help in the process.
Ken Go: There is no problem to ask for others’ opinion but remember, no matter who you ask questions from, you have to try and get proof of what they are saying. Know what are their backgrounds in the foreclosure business. If it’s someone you just met who knows someone who can get you a low modified rate, then this is hearsay.
To me, the only person who can help you realize and analyze your loan situation is your lender. Call them and ask them about your chances of for loan modification, loan restructuring, consequences of a Deed in Lieu of foreclosure. Ask them what is the best option for you.
I have requested callers who know someone who has done modification to call me and show proof of those low rates that I hear about. Especially now that they have multiple terms associated to a Modification, due to current changes, the basis for how these people may charge you.
I have seen modification for ARM loans that were converted to fixed rates without a rate increase. I have seen an extension of ARM rates for another 5 years, both fully amortized and interest only. I have seen loan restructured where the defaulted balance was completed added towards the principal and the buyers payments were adjusted accordingly.
I have never seen a loan balance reduced. Please call me let me know about this info, so I can share it with others. I believe that rate reduction is possible, term extension, trial payments, forbearance of payments but so far no loan balance reduction approval.
Caller: I would like to take over a payment of my co-worker who is in trouble and might go into foreclosure on his property. They have put in a lot of money and work into beautifying their home. Unfortunately, their loan has a reset feature that increases their payments by another $ 700 and they really cannot afford it. I have some savings to bring up the property to current and I would like to take the loan over.
Ken Go: After reviewing the entire package, I suggest that you not take over this loan. You will be taking over a 7.5% interest rate and you will be assuming a $359,000 loan, whereas the property is only worth about $250,000. You have the cash so I would offer the lender maybe $230,000 under a short sale and get a new loan with your credit standing. You can easily obtain a 4.75% or under interest rate. You will have loan cost but you will have about $110,000 if they accept your $230,000 offer right? I would definitely choose to go thru all these hurdles to save that money.
Caller: Owns multiple properties, all have renter/boarders. But they are relying too much on boarders’ income to pay for all the mortgages. The property is upside down and the homeowners are asking for a loan modification.
Ken Go: I have always warned homebuyers not to rely too much on renters /boarders. They should not be the reason for buying a house, thinking that you can make your payments. If you absolutely have to factor in this scenario, make sure you are basing the payments on a fixed rate loan and considering the vacancy factor. As far as the loan modification, you are not going to get any sympathy from the lender for investment properties or non-owners. Although with proof of boarder’s payments in good record, some lenders might use that as your income to increase your ability to pay.
Caller: I have heard of numerous companies offering to sue the lenders for APR miscalculation or what they call “Forensic Audits”, how true are these and is it worth for me to pay them the money to do this?
Ken Go: I am assuming that there might be an actual case out there somewhere, but from all the callers and from what I have been researching online, I don’t think that is a solution for everyone. I have also gotten calls for a class-action lawsuit against certain banks for predatory lending practices. Again, it might be true, but to a very small percentage who actually might be getting the right representation.
You should get guaranteed results in writing, research the companies online, check with BBB (Better Business Bureau) for complaints and talk to the right representative before writing them a check or signing a contract.
When you deal with these people, make sure you go direct to the top owners of the company and not their representatives or independent contractors. Remember, if they are only independent contractors for the company, the company is not liable for anything they do. They could promise you the stars without having to deliver.
I am getting numerous complaints about a modification process that deals with representatives that are not even employees of the company they represent. Don’t let business cards and fancy offices fool you.
My advice is still to talk to your lender. Why? Be truthful to yourself. If the lenders cannot help you, it’s probably because either you don’t qualify for “hardship” or you don’t qualify to make the “payments.” Learn to take “No” for an answer. Otherwise, you will be swimming with sharks who will take everything you worked hard for! Be very careful.
I have a number of callers who maybe going into foreclosure and they would like to short sale their properties, so call me if you are interested and I will give you the details of the homes. Preparing is key if you are in the market to buy.
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Please call and continue to send your inquiries in, appreciate your calls. Call Ken Go at (562)697-7028 or write to This e-mail address is being protected from spambots. You need JavaScript enabled to view it .
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