Why Your Loan Modification May Be Scamping You
Why Your Loan Modification : We’ve got another big challenge in the loan modification industry. Whereas before there was so much false information, now there is a lot of good information, but much less on the ability to follow the loan modification process. So, how to get a loan modification done?
Here’s some of the good news and the bad. The good news is the ability to get a loan modification is still possible even though we are in a recession, it’s just going to take some time before a loan modification is actually approved. The bad is that now we are having what some call a “cage act” with some of our lenders including our direct primary, shown below. The difference is we actually have permanent loss mitigation; a major negative for some of our lenders.
This still leaves a lot of problems in the loan modification industry and the modifications that are not a result of the direct primary. That’s why the second budget was cut by 2/12 and why loan modification fees have increased. The combination of these 2 factors is creating more problems for the lenders. Here’s some of the issues with the mortgage industry as a whole.
Loan Modification Being Difficult to Get:
Most of our lenders have taken the direct primary route, either through Global First Banc, eliminative, or the CBMS group. The problem with the Global First was because they were just too big to open up the modification process to smaller lenders, which was the previous way that it was done. You must remember most of the individual banks, credit unions, mortgage companies, and servicers onlyandi have 20 mega centers in their loan modification deals. Therefore you are limited to what specific lender is going to want to deal with you.
meaning in some cases they may tell you they will work with you but in reality, they just want to scrimp you out of all the money that you are trying to save. Sometimes a lender delays on a modification application because they don’t think that you will accept the application or because they don’t want to deal with you. In some cases they complicate the middle part of the process to make it difficult to get everything in place.
The problem is that the banks saw the expensive job that the new modification process took and decided to pass that cost on to the individual borrowers. Now the financial institutions can’t afford to forego one of their measurements, which is to hold on to an extra 1 or 2 million dollars on the foreclosure balance book in order to utilize this option. So that’s a negative for some of the small lenders.
Loss mitigation: Eroded. It’s important to understand who is actually losing on this initiative because in the end the lenders will benefit more than the borrowers.
So Keep in mind, the principal reduction programs survive only if lenders are willing to fund the principal reduction. With no principal IRA, loan modification is unwarranted because none of the lenders will see any money on the loan.
Moreover, only if there is asan increase in the amount of money owed on the house could egreyh ageing foreclosurea loan. This is completely contradictory to PNC and Chase and how they were conducting business two years ago because they were beyond what they had to do to survive in this crisis.