Chattel Mortgage

Loan mod­i­fi­ca­tion has become the solu­tion of choice for many peo­ple fac­ing unaf­ford­able mort­gages and fore­clo­sures.  In response, banks and lenders have attempted to dis­cour­age bor­row­ers from obtain­ing legal rep­re­sen­ta­tion by spon­sor­ing aggres­sive pro­pa­ganda cam­paigns directed at home­own­ers.  As the mar­ket for mort­gage assis­tance grows and lenders con­tinue their efforts to con­fuse home­own­ers, many home­own­ers enter loan mod­i­fi­ca­tions with seri­ous mis­con­cep­tions and end up mak­ing unin­formed deci­sions. So, how do you dis­tin­guish fact from fic­tion? Can a loan mod­i­fi­ca­tion really stop a fore­clo­sure and solve all of your mort­gage prob­lems? This guide pro­vides real answers to some of the most com­mon myths about loan modification.

Fic­tion #1:  You can do it on your own.

FACT:  Tech­ni­cally, you can, but it takes a lot more work and the results prob­a­bly won’t be the same.  In short, it is not rec­om­mended.  Banks and lenders would like noth­ing bet­ter than for you to attempt a mod­i­fi­ca­tion your­self.   They know that they can wear you down with frus­tra­tion and uncer­tainty until you accept their terms; usu­ally a “mod­i­fi­ca­tion” that ben­e­fits the lender in the long run and does not pro­vide the bor­rower with a sat­is­fac­tory long term solu­tion.  These days, the Loss Mit­i­ga­tion depart­ment is a bank’s busiest depart­ment.  A typ­i­cal loss mit­i­ga­tion offi­cer is required to han­dle as many as 800 cases at a time.  These peo­ple are over­whelmed and sim­ply do not have time to deal with your prob­lem ade­quately.  It is not uncom­mon to be passed from one agent to another and never get any real answers.  Many home­own­ers have been left with the impres­sion that they are in the process of work­ing out a mod­i­fi­ca­tion with their bank, only to find that their house has been sold out from under them dur­ing that process?  A loan mod­i­fi­ca­tion attor­ney, on the other hand, com­mu­ni­cates directly with the deci­sion mak­ers at your lender, and uses sig­nif­i­cant lever­age to get your file to the” top of the stack”.  When a lawyer rep­re­sents you, the calls get returned faster, you get more per­son­al­ized ser­vice, and you gain the capa­bil­ity to actu­ally obtain the type of loan you need.

Fic­tion #2:  Your lender would rather fore­close than mod­ify your loan. 

FACT:  In some cases, fore­clo­sure is the more cost effec­tive option.  How­ever, accord­ing to a recent Tower Group study, lenders lose sub­stan­tial money with every fore­clo­sure and are con­se­quently required to increase their reserves.  The banks already have the lia­bil­ity of own­ing too many fore­closed prop­er­ties and have too many non-performing loans on their books.  Accord­ingly, lenders would much pre­fer to adjust your mort­gage to some­thing afford­able and con­vert your loan into a per­form­ing asset.Don’t be intim­i­dated by threats of foreclosure!

Fic­tion #3:  You can’t stop the fore­clo­sure process.

FACT:  It is true that your chances dimin­ish the longer you wait.  How­ever, until your home is actu­ally sold at auc­tion, no one can force you to leave your home.  A loan mod­i­fi­ca­tion can stop the process as close as seven days before the sale date.  This buys you enough time to get back on your feet while your lawyers work out a last­ing solu­tion with your lender.  Of course, it is bet­ter if you don’t wait until the last minute.

Fic­tion #4:  It’s an instant solu­tion to mort­gage problems. 

FACT:  Loan mod­i­fi­ca­tions really work, but they take time and the right exper­tise.  Depend­ing on how far behind you are, the process can take any­where from one to three months.  How­ever, since the mod­i­fi­ca­tion process stops the fore­clo­sure process, you won’t have to worry about los­ing your home while the mod­i­fi­ca­tion is in process.  If you sub­mit your paper­work on time and coop­er­ate with your lawyer, you can speed up the process and avoid complications.

Fic­tion #5:  You need good credit to qualify.

FACT:  Stan­dard require­ments vary from lender to lender, but the bot­tom line is that the loan mod­i­fi­ca­tion should make finan­cial sense to your bank.  The most impor­tant fac­tor is ver­i­fi­able income that demon­strates your abil­ity to main­tain the pay­ments going forward.Your credit rat­ing doesn’t have any­thing to do with it.Your lender will want proof that falling behind was a tem­po­rary snag, and that you can afford to stay on track if they do mod­ify your loan. This means you have to have a ver­i­fi­able source of income and a valid case of hard­ship. You don’t need to dis­close your credit rat­ing in most cases.

Fic­tion #6:  Loan Mod­i­fi­ca­tion com­pa­nies are scams. They take your money, but don’t do anything.

FACT:  In any busi­ness there are always some unscrupu­lous peo­ple, but you can find legit­i­mate orga­ni­za­tions that will help you.  The impor­tant idea in loan mod­i­fi­ca­tion is to work only with an expe­ri­enced and knowl­edge­able law firm or attor­ney who has a track record of suc­cess.  You should thor­oughly inves­ti­gate the back­ground of any­one who claims to be able to do a “loan mod­i­fi­ca­tion” before you pay for services. The Fed­eral Trade Com­mis­sion (FTC) strictly pro­hibits any non-attorney orga­ni­za­tion from rep­re­sent­ing dis­tressed homeowners.

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