Mortgage X-Ray: Do Loan Modifications Work?
The Truth about Loss Mitigation. Will they ever approve you? And for what? Almost all Lenders have a Loss Mitigation Department that estimate and rule on loan alteration requests for homeowners in financial duress. Problem is most loan modifications do not really assist homeowners with mortgage payments and do not provide the cure that homeowners need in order to keep their homes and provide the payments in the long run. About 95% of applicants for these programs are denied and the number of homeowners who default on their new alternation terms is already higher. This stupefying delinquency rate has engendered edges to extent back on granting long-lasting modifications in favor of trial modifications. These trial terms are usually 3 or 6 months, which would be a palatable option if the lending institutions would honor their provision that if you make your payments in a timely manner then the terms would be ossified and the payment would become long-lasting… however that almost never happens. In contrast what the edges consider a alteration is usually just a forbearance agreement or repayment plan.
Forbearance is a quick solution that permits you to simply get “caught up” which is an abstruse retort that provokes the bank to add all late payments in default to the principal balance as it occurs interest over the remaining term left on the mortgage. Rarely is there a difference in payment and already more atypical is an actual decline in payment. Similarly a Repayment Plan is just an agreement that allows the delinquent payments to be paid over a few months and allows you to again “catch up” so you can stay in your home. Neither the former nor latter are a modifications but they are graded as such so the edges participating in these government programs can cash in on subsidies. Sorry. That’s how they system is set up.
So what are your options? Should you apply for a loan alteration or sue your lender? Let’s focus on the alteration option first. Procuring one is an arduous task because of the great deal of obstacles you must conquer in order for the bank to give your request a judicial review. Usually the bank loses or misplaces (ahem…by design) the application you’ve provided them or they regularly ask you for additional or updated documentation. Often the bank will already refuse to communicate, resolve, or accept payment from homeowners who are in default and if they do; they will most likely botch up the paperwork inhibiting the payments from being recorded properly. There has been enough empirical evidence to suggest that Loss Mitigation Departments use filibuster strategies to delay or drag out alteration requests until you relinquish the time of action altogether.
Why would this be advantageous to the bank? For one, they are overwhelmed with loan alteration requests and instead of designating more proficient mitigators to meet client demands, they are laying them off so the edges only different is to lower the amount of applications in their ques. So everyday the bank is looking for (or fabricating is a more appropriate information) any reason to deny as many modifications as they possibly can. But a more credible explanation is the bank makes more money on your character when they foreclose on it. Not on every character but if they are NOT assisting you, they have already determined their most profitable option and a foreclosure is imminent. You should know that most edges recoup character losses via insurance coverage or government subsidies and Tax breaks, so all things considered they will not suffer losses like traditional thinking would denote.
Should You hire someone? Who? and what will they do differently? You can hire a Loan alteration Law Firm or Attorney who will “file” and negotiate the alteration for you. It’s kind of a shot in the dark because already though this route increases your chances of being granted a alteration you’re paying someone in hopes that they are going to deliver on what they have promised you. The scope of sets these entities provide is pretty rudimentary: they usually collect a HAMP, MHA, or internal mod application, a strength of attorney or 3rd party authorization and supporting documentation, then fax all that to the lender. This is no different than what you can do on your own. already if these entities had the bank’s decision making blueprint, the problem is nevertheless that the lender will doubtful give the file the thoughtfulness it needs to be properly evaluated. A lot of these companies prove unsuccessful in their attempts to get these mortgages alternation. So unless the loan alteration company or attorney takes your file on contingency I would not recommend paying them upfront for their assistance. In consequence by doing so you are adding an avoidable inner of confusion between you and the lender, at the minimum when you’re applying for your alteration you are hearing from the bank directly their reasons or rationalizations for their actions instead of hearing it from a 3rd party who may be prevaricating, maybe due to avoid having to issue you a refund.
Can You Sue Your Bank? By now we all know how unscrupulous edges and mortgage companies have been in their business conduct over the past decade. There have been countless individual and class-action lawsuits filed against big edges, mortgage companies, and servicing companies alike. edges have been indicted on fraud, botching foreclosure paperwork and violating laws requiring lenders to seek alternatives before putting delinquent borrowers out on the street. The complaints have ranged from alteration negligence, illegal foreclosure, intentional misrepresentation, overcharging, and predatory lending and MERS, and on and on and on. Discerning the frivolous complaints from the basic ones is paramount in your success so how do you know if you qualify to join and which lawsuit would provide the best consequence for you and your family?
There is no shortage of Law Firms promising to lower your principal balance, reduce your interest rate to 1% or 2%, and already getting you cash for damages… but then they ask you for thousands of dollars to participate as a plaintiff (as if you would be in this position if you had the funds), that’s the only way they claim you can take advantage of these new restructured terms. Here’s a tip, NEVER PAY MONEY IN improvement TO JOIN A MORTGAGE LAWSUIT. If the attorney really believes in the complaint they’re filing they should take the case and make the payment on contingency where they take a percentage of your winnings once case is settled. That’s it. There is no justification for any other method. The bottom line is edges are pressured to settle their lawsuits and they are complying and paying out so if you are told by an attorney that you have a strong case then it is in their best financial interest to take a portion of the settlement (which would provide a higher return) as opposed to charging any money to go into a lawsuit. Suing your mortgage company could be a good move. It’s proven prudent for many prevailing plaintiffs but it’s all about fighting the bank the right way with the most competent lawyer.