CANNOT refinance. Appraisal values too LOW. Late on your mortgage payments. Mortgage payments keeps adjusting higher.
There has been a staggering number of callers calling about Loan Modification Companies taking your money and pretty much failing to come true to their promises. I have always advised that you should first try to talk to your lenders yourself, before talking to anybody else. If that fails and someone promises to help you for a fee, specially if they tell you that they will promise loan balance reduction, tell them to show you proof in writing. There is no reason why they would not do that.
If you notice, the fees for Loan Modification have been lowered. Because a majority of people are doing it, it does not mean they are really helping customers.
I noticed that everyone you talk to knows something or thinks they know someone who can help you modify for a fee. There is a “multi-level marketing” scheme going on in our community, where you refer someone who needs help and you will get a referral fee -- which by the way is illegal. But it’s being done, so you are talking to someone who wants that referral fee and will say or promise things they don’t know to you. Beware!
I have written numerous times that if someone gets a loan balance reduction they should call me so I can share this info to our readers. Why not help each other avoid scams and feel good about yourself? That is why we are here in America isn’t it? Not to take advantage of others.
This is a common occurrence now, and the numbers are staggering as far as homeowners not being able to do all the above stated. I understand and sympathize with you and know what you are going through. That is why I write these articles and try to give out as much information as possible, because by knowing what you need to do in a situation like this, it will give you some kind of direction.
Based on what I have been reading and experiencing, here are my advices:
Don’t deny that you have a problem -- read your mails and take calls from the lender. Make sure you communicate and not hide from this situation. I will show you some steps in order for you to know how to deal with these problems.
Do-it-yourself steps
You have to prepare a hardship letter to provide to your lender. If you lose hours from work, had a roommate or relative that was helping you pay your mortgage, your Adjustable Rate Mortgage reset pushed your payments up by $500 or more, these are samples of why some homeowners need assistance from their lenders.
Your lender will ask for proof of income (2 months of pay-stubs) and for 2 months of complete bank statements. They will need a list of all your expenses, revolving credit debts, utility expenses, insurance expenses, installment debts -- basically everything you need to pay for on a monthly basis.
Get all of these information ready to provide to your lender and request for your interest rates to be reduced to 5-6% and for payments to at least go down by $500. Request also for your loan balance to be decreased due to the declining market factor.
If that does not work or you don’t want to make time for it – call HUD (Housing Urban Development). Agencies that give out free counselors are non-profit companies that are funded by HUD to provide counseling for FREE to homeowners in dire need of assistance. Here are some numbers :
LA County – (800)750-2227Orange County – (714)547-2227
Or to find a counselor, near you call (800)569-4287
Avoid foreclosure prevention companies that charge money upfront – you don’t need to pay fees for foreclosure prevention help. Use that money to pay for your debts instead. Many for-profit companies will contact you, promising to negotiate with your lender. While these may be legitimate businesses, they will charge you a hefty fee for information and services that your lender or a HUD-approved housing counselor can provide for free.
I got a client call today who claimed that they heard of some homeowners who were able to negotiate a lower loan balance with their lender. I have never heard of that and I don’t think it’s possible because everyone that we try to help, we also request for a loan balance reduction from their lenders. But we always get declined by the lenders for that particular request. So, if anyone has had a loan reduction approved by a lender, please share the information with me so I could inform my readers.
Also, another thing that is very common: borrowers suing their lenders to avoid foreclosure. Please be very careful. I can name numerous callers who paid tens of thousands of dollars to try to sue lenders, but failed. One paid over $45K just in lawyer fees, but later got foreclosed on too.
Don’t loses your house to foreclosure recovery scams! If any firm claims they can stop your foreclosure immediately by signing a document appointing them to act on your behalf, you may well be signing over the title of your property and becoming a renter in your own home! Never sign a legal document without reading and understanding all the terms and getting professional advice from an attorney, a trusted real professional or a HUD-approved counselor.
Remember, you can go to makinghomeaffordable.com to get detailed information on the entire process. Also, remember you will always want to seek advice from your CPA on income to be declared on a recourse loan.
Reminder: Don’t pay for a loan counselor unless you have proof of what they can do for you. Don’t pay anyone to do a short sale! There are other options besides foreclosure.
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Please call Ken Go of 1st Innovative Finance Group at (562)508-7048 or write to This e-mail address is being protected from spambots. You need JavaScript enabled to view it .
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