In California earlier this year a company calling itself Federal Loan Modification Law Center (FedMod) hit the spotlight after it was learned that they had not been successful in delivering loan modifications to consumers who were paying them thousands of dollars for their services. FedMod is not the only company to succumb to this temptation.
You can call this practice the flip side to predatory lending. It’s predatory loan salvation - only no one’s loans are being saved. It amounts to financial rape.
FedMod had been a mortgage broker helping people get in over their heads in loans they couldn’t afford. Then, when the loan modification trend started, they started billing themselves as loan modification experts. Here’s what the Modesto Bee reported in July this year:
Despite making promises of relief to homeowners desperate to keep their homes, FedMod and other profit-making loan-modification firms often fail to deliver, according to a New York Times investigation based on interviews with scores of former employees and customers, more than 650 complaints filed with the Better Business Bureau and documents filed by the Federal Trade Commission in a lawsuit against the company.
According to the Bee, FedMod failed to deliver one successful loan modification. That’s unacceptable.
In our view, if you want to succeed in getting your clients the loan modifications they deserve, you have to start with solid information on their loans - the good, the bad, and the ugly. A forensic loan audit is designed to uncover lender violations that could lead to a successful loan modification. It’s about time we rid ourselves of predatory lenders and their friends and help people with real services designed to keep them in their homes. A trustworthy company will offer a full money-back guarantee.
If you received a home loan between 2002 and 2008 then you could be a prime candidate for a loan modification. But before you attempt a loan mod, you should first have your attorney seek a forensic loan audit.
Most loan violations occur in loans that were originated between 2002 and 2008. During that time many lenders issued high interest loans, refinanced loans, and ARMs - adjustable rate mortgages. Those types of loans are the most often problem loans for the homeowners because the borrowers end up not being able to afford them. The banks should never have issued those loans based on the borrowers incomes and ability to pay. That makes them bad loans.
That’s not to say that if you have a loan that originated in those years that you automatically qualify for a loan modification. Your loan is not necessarily bad because it was issued during this time frame. But the fact that your loan originated during that time puts you in a high risk category. If you think you may be headed toward foreclosure or you’ve been getting foreclosure threats from your bank then you should seek assistance from an attorney and request a loan audit. The loan audit will tell you if your lender has violated any applicable law and give your negotiating power in seeking a loan modification.
Is your mortgage unbearable? Do you find making the payments harder and harder every day? If so, there may be relief.
It’s a known FACT that 83% of all mortgages have lender violations. And many of those violations could result in hefty fines for the lender. The lender would rather renegotiate your loan payments than to have to pay you back your back interest, which is the penalty for many violations, AND pay a fine on top of that. It just makes more sense for the lender to renegotiate your loan and help you get your payments to an affordable level.
That said, the only way you can tell whether or not you have lender violations in your mortgage contract is to get a forensic loan audit. A forensic loan audit consists of a professional review of your mortgage documents to see if your lender followed all the applicable local, state, and federal laws concerning your type of loan. Even an innocent error by your mortgage company can be a costly mistake for them. That’s why uncovering even a simple error could be your best ammunition for renegotiating your mortgage contract.
If you’ve been hit with an emergency crisis situation that has made paying your utility bills difficult and placed a strain on your mortgage financing then a piece of legislation known as LIHEAP - Low Income Home Energy Assistance Program - could help you save your mortgage and keep your house.
Many families who have been through a natural disaster or other emergency have difficulties afterwards paying their bills, including utilities and the mortgage. The rising cost of energy coupled with the strain on the family’s budget caused by the disaster, with necessary repairs and medical bills to pay, can add stress where it isn’t welcome. That causes families to make hard decisions about which bills to pay and which ones to pay on time. The problem is, creditors are forgiving only for so long. You can’t sacrifice your mortgage to save the utilities and you can’t ditch the utilities to keep the mortgage. What kind of life would that be?
So LIHEAP is a federal program that offers assistance to low income families to pay their utility and energy bills. That frees up your income to pay for the mortgage. But what if things are still challenging?
You may be able to go to your lender and request a hardship modification. Some lenders will work with you and help you save your home because they realize that if they don’t they will just end up with your property on their books, a liability, when they can help you stay in the home and be an asset for them.
If you find yourself in such a hardship situation, speak with your attorney and see if there is a way to approach your mortgage company and request a loan modification. If worse comes to worse, use your ace in the hole - a forensic loan audit.
