If you’re like everyone else you can’t get away from the incessant talk and advertising about loan modifications. The onslaught of offers to modify mortgage loans is not just limited to Sacramento or Roseville either, this is everywhere. And much of what we hear sounds too good to be true, but is it?
Modifying loans is not something new. Lenders have been able to, and occasionally even would approve, a loan modification for as long as I can remember. Years ago I worked in the mortgage division of a Sacramento-based Credit Union where we would modify loans somewhat frequently if it made enough sense for our client and the company as well. These modifications were few and far between. Both within my company and even more so for the mortgage and banking industry as a whole. So, even though most of us had never heard of them, loan mods are nothing new.
What is new is a new, independent, loan mod industry. This is what we hear and see about every day. Offers from someone to modify your loans, masquerading as a public service. However this is very much a for profit industry. The average loan modification client creates more income than a mortgage company or broker will make on a closed loan. And the loan mod company makes that money whether they achieve any sort of modification or not! Pretty sweet deal for them, huh?
Although most brokers in Roseville (and Sacramento) are modifying loans now we do not at Comstock. Now I can’t speak for the entire industry but only from the experience and research we’ve done here on our own. What we’ve found is astonishing! Based on what we have seen the majority of the new loan modification companies that have sprung up in the last year or two are failed mortgage brokers. The very same mortgage brokers responsible for the predatory lending that put their borrowers (and our country) in their current situation on the first place. They took their clients for as much as they could from 2003-2007 buy putting them into subprime, neg-am, and interest only Adjustable Rate Mortgages they knew would blow up, and after not being able to survive in the current environment where those types of loans aren’t available anymore they moved on to loan mods after a short hiatus out of the business. Those very same brokers that gave us all a bad name over the last decade are now loan modification specialists. Well at least they are not originating loans anymore.
Does it sound like I am down on the loan modification industry? Haha…. We it’s not just me. The California Department of Real Estate has been investigating these companies and, based on what I’ve been told by a friend inside the DRE, the vast majority of them in California are working outside of state law. The DRE also just released this Consumer Alertregarding the payment of advance fees to a company contacting you about a loan mod if you are in default. Unless they are an attorney and offer loan modification services as part of their regular practice the company is not allowed to collect anything from you up front.
What is the one thing they won’t tell you? They are not doing anything you can not do yourself. Before talking to any of them pick up the phone and call your current servicer. You have the ability to do anything they can. And now with the Home Affordable Refinance if you are current on your mortgage (which I can help you with) or the Home Affordable Modification if you are behind (which you can do on your own without having to pay anyone thousands of dollars) that are results of recent federal government stimulus you have no need for them. If you have any questions about these options please let me know or come to our Roseville branch and see me.
In the end if you have been contacted out of the blue by a loan mod company or are considering calling one of the ones advertising on radio or TV do your homework. Make sure to find out what their primary business is, how long they have been doing it, what they charge, what their success rate is, and get some references as well. Try to work with someone locally if possible and shop around. I would look for the one with the best guaranty if you are going to go this route.
“The Roseville Loan Expert” ~ Greg