Loan Modifications
January 29th, 2009 by KenricI have been talking to my loan holders about their loan modification programs. It’s pretty clear to me that whoever you talk to knows nothing. This is their first layer of defense. I think they do this on purpose to discourage people from calling. I mean if everyone knew that they were reducing interest rates and principle balances they would be flooded with calls. Based on what I’ve heard many lenders are doing it. Some are easy to deal with and most are very difficult.
The lady I talked to today said that they are only modifying loans above 8%. She did contradict herself many times during the call. First she told me that if I couldn’t afford the home, lowering my interest rate 2% wouldn’t help me at all. So then I said I could afford the home, then she tells me my rate is lower than 8% so they can’t modify my loan anyway. So which is it?
On top of that, she was rude. I read in a few posts how people were so mad after talking to their loan company that they wanted the home to go into foreclosure to spite them. I can easily see this based on my conversation today.
The lady told me my only course of action was to put the home on the market as a short sale. She said that they would pay 3% commission to the realtor. Maybe I’ll sell it to myself or my LLC. That’s an interesting option now. :-)
I heard from a friend today that he got his loan rate reduced from 6.25% to 3.25%. But he was late on his payments. I’ve also heard through grapevines of people getting $50k or $100k knocked off their principle.
There are many loan modification companies out there and law firms are starting to offer this as a service now. I’m pretty wary of these companies as some charge an upfront fee. I’ve seen from $2,000 all the way up to $20,000. The $20,000 fee was not upfront. Leave it to lawyers to charge a 10% commission fee based upon how much you get your loan principle reduced from.
I have a friend who works for a loan mod. company and she’s offered to try it on one of my homes at no upfront cost. I’d like to see how this process works and of course I hope to get my loan dropped $100k and 3%. Obviously, if this works she’ll instantly gain alot of business from referrals and probably from readers of this blog. We’ll find out in a month!
Posted in Real Estate | 4 Comments »
Stumble it!
Kenric,
Would one of the loan companies be Wells Fargo by chance? This behavior sounds EXACTLY like them.
By TheLandlord on Jan 29, 2009
Short sales are a little less damaging to your credit than a foreclosure. If you decide to go that route, list the house with someone that is experienced with short sales with your specific lender.
The short sale will have to be an arm’s length transaction and the property will have to be listed. No sales to family members or related entities allowed. You will need to prove hardship. The standards for hardship are likely to loosen as there is more government intervention, but there will be a big bias toward owner-occupants and against investors.
You are in for an interesting adventure. No breathtaking photos from this trip, though. Looking forward to the details as they arise…
By Another Investor on Jan 29, 2009
And don’t forget, which a short sale, the bank will probably hit you with a 1099 for the principle reduction, raising your tax bill. Hmmm.. I wonder if they would do that will a loan modification as well..
By Shaun on Jan 29, 2009