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Compliant Loan Modifications

This is chosen when the homeowner wishes to modify one or more of the terms of their mortgage. Whether it be the lowering of their interest rate, changing their ARM to a fixed mortgage, or extending the term from 30 to 40 years, etc. Making these changes is completely voluntary on the part of the lender so it is vital to have a game plan in place that will include, not only a hardship letter in your handwriting, but also the documents to back up the hardship you are presenting. [More on that later.] About 100% of the time, no exaggeration, I get the question about reducing the outstanding principal balance.

The hard truth is that, despite what you hear on the news, only 2% of loan modifications actually result in a principal reduction. I know, I know – your co-worker’s sister’s friend’s nephew’s neighbor who lives in Phoenix did their own loan modification and cut the mortgage balance in half and lowered their rate to 1% fixed for 40 years after their first call. I know. I have heard that too… can never seem to actually track this prodigy down, but I have heard the story nonetheless. If you choose an attorney to represent your interests with a loan modification then you should expect to pay around $2300 to $3300… most of which is likely refundable.

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Forensic Loan Mediation

If you owe more than your home is worth or simply wish principal reduction as a primary objective, which is what we are finding in most of the cases for Orlando loan modifications, then you may skip loan modifications all together and explore loan mediation.  You can get help in determining which is best by filling out a loan modification worksheet.

Boiled into its simplest form, loan mediation is accomplished by engaging an attorney on retainer to facilitate an Orlando forensic loan audit of the mortgage file. Yeah, it sounded intimidating to me at first too, but in essence, all it means is the attorney explores in great detail if all the proper steps and guidelines were followed by the lender. Here are a few of the things that are done. [Since half the people reading this are likely wanna-be loan modification ‘experts’, I will limit the specifics to a select few points.] Such as;

• Calculation and analysis of Federal Real Estate Settlement Procedures Act [RESPA]
• Predatory Lending Analysis
• Federal Fair Lending Act analysis
• Financial Benefit analysis on cash-out refinances

… and 16 other very specific procedural and feasibility examinations.

Mediations analysis does not just relate to the original handling of the mortgage, but also the custodial chain of documents if your mortgage has ever changed hands and timelines under RESPA.. The only way to do this is with an attorney in your corner. Is it worth it? That is for you to decide. It is not at all uncommon for attorneys to be able to skip the first two options a lender will offer direct to homeowners simply because all emotion is removed from the equation. A reasonable fee to expect to pay is between $2800 and $3800. Due to the fact that you are retaining that attorney to do the forensic loan audit, the fee they charge is probably not refundable.

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Who can you trust?

Loan modifications and mediations are not for everyone. With a price tag of between $2300 and $3800 as noted above [some even charge more], you should be able to get some reasonable assurance that you can expect a positive result.   That being said, you may notice that the costs of a loan modification/mediation –though nothing to sneeze at – are quite a bit less than the other options you likely have. Let’s compare the other options on the table. assurances that you are not placing that money on RED and spinning the wheel.

In addition to Loan Modification and Loan Mediation, you can look at:

• Refinancing – This is only an option if two things exist in the same scenario. Both the homeowner and the property qualify. As you likely know, even in a perfect financial situation on part of the homeowner, if the property is significantly upside down as we are in Orlando in many cases, this ‘ain’t gunna happen’. I think this is what should be explored first, however. The cost of such is probably double what loan modification would be. The benefit would be the ability to avoid having to come up with the fee by being able to roll those costs into the new mortgage assuming the value of the property would allow it. If you were referred to this article by a mortgage professional – consult with them about this option… not me. The purpose of posting this is not to pull business away from other good mortgage professionals, but rather to combat much of the mis-information out there in the marketplace. If you weren’t introduce to this content from another mortgage professional, by all means – feel free to contact me. =0)

• Short Sale – If you are current on your mortgage and wish to get out from under the house with your credit intact, this may be the right option. The mortgage originator that directed you to this article can lead you to a Realtor that is a Short Sale Expert. Don’t be fooled – a ‘short sale’ is anything but short. If you are going to travel down this road, make certain you are working with a Realtor that “gets it” when it comes to Short Sales. Don’t attempt it with someone unfamiliar with the process. If you do, I offer my condolences in advance.

• Short Refi – This is basically a short sale without a new buyer. A new mortgage is attained after the current lender agrees to a short payoff. Your mortgage broker will provide a letter to the current lender in order help facilitate the new transaction. Now, since you are qualifying for a brand new mortgage, you can’t have any late mortgage payments. Ask yourself… why would the new mortgage company take on a risk that the other is trying to dump unless they qualify like any other borrower?

• Foreclosure – this is the worst possible outcome, but is the default course if nothing else is done… like choosing Option #1. No one wins with foreclosure. Not the homeowner – not the lender, not the neighbors, not the economy. Avoid if you can by getting sound advice from a mortgage planner and your current financial advisor. Your financial advisor might not be a professional, but get input from whomever you currently trust and turn to for financial insight. If you would be interested in an introduction to a true professional in the financial advice world, let me know. I am glad to help with an introduction.