So here you are, behind on your mortgage, credit cards, utilities and god knows what else. Your bank recorded a Notice of Default on your home and all of a sudden … BAM … mountains of unsolicited mail and phone calls from everyone and their brother who would be more than happy to help you with your problems. Sound familiar?
It has been my experience that most homeowners were not irresponsible in their spending habits, ok maybe just a little. But that wasn’t the source of the problem that made everything spiral out of control. Sure, the savings may have been non-existent but you would be surprised how many homeowners I have worked with actually had savings accounts. The source of the problem is generally a one-time event that was life altering, aka; death in the family, illness accompanied with massive medical bills and no health insurance, loss of job, etc. Believe it or not, I have worked with people where all these issues culminated into one bad year for the family. Now, add to the stress; one never ending pile of “help” from strangers that you never asked for and it makes you want to snap. I get it.
How is it that you get this unsolicited mail and barrage of phone calls, simply put, public information. When you purchase the property, the information is recorded with the county. Since the county information is public information anyone (actually everyone) can get this info and businesses will use it for marketing purposes. This in itself is not necesarily a bad thing, you may find that one of these nice companies can actually help you in your current situation.
Rules of the road: There are some rules of the road you need to follow to protect yourself and your family. Our focus here is upfront fees in return to process your loan modification.
If you are considering a loan modification remember this one vital rule. Advance fees are illegal in the state of California. If they ask you for money up front, collect money up front or collect fees up front, they are in violation of California law. This link will take you to a Consumer Alert Bulletin issued by the California Department of Real Estate regarding paying fees up front for loan modifications.
I always tell my clients, if you would like to pursue a loan modification, I recommend giving it a shot yourself. No one can convey your hardship better than you. The reason most homeowners don’t do this is simply because they don’t have the time, patience or feel intimidated by the process. Don’t let these things stop you from giving it try. If you are denied, you can apply again. There are different programs available depending upon your situation. Whatever you do, don’t procrastinate. If you feel that you aren’t making progress, give me a call. I’ll give it a shot, but the truth of the matter is, depending upon your situation to include debt-to-income ratio, etc., a loan modification may not be in the cards. It really depends on what you and your lender need to make it make sense for you both.
The truth is a small number of loan modifications have actually been processed and approved. Be aware that the first 90 days after you and the bank agree on a modification might very possibly be a trial period which means that the lender could decide to rescind the loan modification after the trial period. If they rescind the modification they can put your property back into a default and place your property into foreclosure. I have seen it happen.
If you have questions, the following links will guide you along the right path. Just remember, once you have received your Notice of Default do not procrastinate.
- HUD Approved Housing Counseling Agencies
- HAMP: Making Homes Affordable Program
- U.S. Department of Housing & Urban Development