Estate Planning

Can?t Pay Your Mortgage? Don?t Pay a Fee For a Loan Modification Until You Read This!

By Myrna Arroyo

If you are having trouble paying your mortgage or afraid you might be in trouble once your adjustable rate mortgage (ARM) resets, you are probably noticing advertisements all over the place for people or companies claiming they can help you get your loan modified.
Before you pay anything to anyone, make sure you have the real scoop on loan modification. Here’s what you need to know:
1. What is loan modification?
Loan modification means your lender has agreed to reduce your interest rate or stretch out the length of your loan, thereby reducing your payments. This reduction can be a permanent reduction or it may be a short-term reduction. All of the terms of a loan modification are negotiable.
2. Can you negotiate your own loan modification?
Yes, you absolutely can negotiate your own loan modification. If you have the time and energy to focus your energy on this and you feel confident in your negotiation skills, give it a shot on your own before paying someone else to handle it for you, by all means.
3. Should you pay someone to negotiate your loan modification for you?
If you do not have the time or do not feel confident negotiating your own loan modification, you can hire someone to negotiate on your behalf, but make sure you take my guidance on this before you do.
There’s a lot of companies springing up and jumping into the loan modification market. In many cases, these are the same unscrupulous mortgage brokers who put you into your loan in the first place. Do not pay anyone other than a lawyer to negotiate your loan modification!
I’ve seen many companies representing that they are lawyer-backed or lawyer-associated. These are not lawyers. Do not pay them to negotiate your loan modification.
In some cases, we are seeing people pay up to $5,000 to one of these companies just to have the company send out a single letter to the lender requesting loan modification, get denied and say “Sorry we couldn’t help you. Good luck!” and then you are stuck in the same situation you were before, but with even less money. That’s the last thing you need.
4. Who should you hire to handle your loan modification?
You should hire a lawyer who has experience reviewing loan documents and negotiating loan modifications and has a proven track record in the financial industry.
You see, in many cases the loans were not issued properly and a lawyer who knows what to look for in the loan paperwork may find defects that can be used as leverage points in the negotiations.
Plus, your lawyer is in a fiduciary relationship to you. This means that your lawyer must act in your best interest, not his or her own, or your lawyer faces losing his or her bar license. These fly by night loan modification companies have no real risk if they screw you over because chances are they will be out of business within the next three years anyway. Not your lawyer.
5. Should you pay upfront for loan modification services?
You should only pay upfront for loan modification services if you are working with a lawyer or someone licensed by your State to accept upfront payments for loan modification. And, you should find out if there is a guarantee program available in case the loan modification is not successful and what your responsibilities are under the guarantee.
6. How much should you expect to pay for loan modification?
Loan modification handled by a reputable lawyer Personal Family Lawyer is likely to run you between $3,500 and $5,000. There are companies offering loan modification services in the $1,500 or $2,000 range, but these are the ones to look out for because oftentimes homeowners are finding that these are take the money and run kinds of places. If you have paid upfront to a loan modification company and they were not able to obtain a modification for you, do talk to a qualified lawyer who handles loan modification Personal Family Lawyer and they may be able to get the funds you paid to the loan modification company back for you.

Written by Alexis Martin Neely, mom, writer, speaker and Personal Family Lawyer. Alexis makes it super easy for your family to talk about and plan for sticky subjects like money, death and taxes. Get Alexis’ humorous, enlightening, and often quite revealing “Family Wealth Secrets” at: www.FamilyWealthMatters.com.

Full post as published by Louisiana Estate Planning on November 29, 2008 (boomark / email).