Smithfield Crossing Law Blog

There is no doubt that it is entirely possible for you to work on your own with the bank to come to a mutually amicable solution to your foreclosure problem, but you must also keep in mind that time is of the essence in dealing with loan modifications.  While you are trying to deal with the lender or servicer precious time is slipping away.

Most lenders and servicers continue on with the foreclosure process while you negotiate a modification or other alternative.  Your denial of a modification may not occur until the day before the foreclosure sale.  And if you do receive a modification offer, the offer might be unfair or possibly contingent on you giving up important rights.

There are no hard and fast rules on what lenders and servicers are willing to do, so it would be very helpful to have a skilled attorney represent you and present your situation in the best light possible. An attorney can review your financial information and help you devise a strategy to reach your end goal whether it be to modify your loan to a fixed or lower rate, add back payments to the principal, temporarily reduce payments, or just to help give you enough time to sell your home or negotiate a short sale, deed in lieu, or other alternative.

An attorney can also review your loans and servicer/lenders’ actions to see if there are any violations of HOEPA, RESPA, Reg B, the Fair Debt Collections  Act,  the Fair Credit Reporting Act,  acts regarding subprime loans, predatory lending acts or any of the other consumer/borrower protections found in North Carolina and/or Federal law.  There are many rules and regulations out there that protect borrowers and consumers that you may be able to take advantage of.

Additionally, an attorney often has contacts in Loss Mitigation, Short Sale, and other departments within servicers and lenders which can increase the efficiency of you loan modification review and so that you don’t have to spend your valuable time on hold with servicer or lender departments just to have your modification paperwork lost or to be juggled from one department to another. An attorney can make these calls, negotiate your position, propose many alternatives, advise you at each juncture and keep you updated throughout the process instead of you spending large amounts of time in limbo wondering if you are doing everything possible and whether you have explored every option to reach your goal whatever that may be.

You may only have one shot at a loan modification or other alternative and by employing the services of an attorney you can feel assured that all possibilities and avenues have been explored.

For more information on loan modifications and other foreclosure alternatives, please visit:  http://zellersrudd.com/areas_of_practice/charlotte_foreclosure_alternatives.aspx

If you are just starting a loan modification business, adding loan modification services to your existing business, or are about to do either, you will need to research and address several different legal issues before you begin. Every state has different rules and laws regarding modifications, so it’s best to find this stuff out beforehand, rather than after you’ve been fined or even arrested for breaking the law.

First off, you’ll want to find out who can do modifications in your state and who cannot. Are there any licensing or certification requirements? Are real estate brokers allowed to do modifications? Are mortgage brokers allowed to do modifications? Can you simply outsource an attorney to write the letters for you, while you just handle the sales and “processing” (i.e. you do everything but sign the pre-written letter that you send over to the attorney to print and sign)?

You’ll want to decide which states you want to do modifications in, and what the different licensing requirements are for each state. Furthermore, you may need to get special licensing or certification, and possibly submit to expensive audits, in order to do modifications on FHA and VA loans, so make sure you look into this before you agree to take on an FHA or VA loan modification.

Can you pay referral fees to just anyone in your state? How much are you allowed to pay? Can you pay referral fees to mortgage brokers and/or real estate brokers? Many state-level real estate and mortgage oversight boards and commissions can get really touchy about this issue, so make sure you don’t cross any lines you shouldn’t be crossing. What about referral fees to accountants, bankers, and financial planners? Many states have regulations about referral fees to these professionals too, so find out before you start throwing money around.

Be careful about who in your company has access to your clients’ personal files and information. For that matter, be careful about who even discusses these issues with your clients and their lenders, as your release forms will necessarily be pretty limited in their ability to protect you. Some states even require you to have locking filing cabinets and a certain level of firewall protection, password logins for you computers, and other internet safety before you can even begin your first modification.

Be aware that some states do not allow you to charge up-front fees for your services. Even if your state doesn’t care, you run the risk of a lawsuit by a frustrated client if the modification is unsuccessful, even if it’s not technically your fault.

Consider having an attorney draft some of your forms, including your Client Authorization, your Client Services Agreement, and any other disclaimer or important form. These are your only protection from lawsuits, so don’t let them be shoddy and loose. Spend the money to ensure that both you and your clients are fully protected. For that matter, you may even want to print this article up and take it to a local real estate attorney to help you answer these important questions. Your state real estate and/or mortgage commission may be able to help you as well.

Here’s a list of loan modification do’s and don’ts to help you avoid common pitfalls.

Do know your rights.

More than 80% of mortgage contracts violate one or more lending laws—and most of them go unnoticed. But these violations can be your biggest weapon in the loan modification process. They can give you the leverage you need to negotiate with your lender and stop foreclosure. Your loan modification attorney can help you understand your rights and use them to get the results you want.

Don’t wait too long.

The foreclosure process is designed so that you have time to get back on your feet and save your home. But that doesn’t mean it’s safe to procrastinate. The longer you wait, the harder it gets to get you out of that fix. As soon as you decide you need mortgage help, call for a loan modification help and get started.

Do work with your lawyer.

Your Home Loan Modification doesn’t rest in the hands of your lender, your broker, or your loan modification attorney. These people can help, but you have to do your part and cooperate with your lawyer. Make sure to submit your paperwork on time, answer questions honestly, and give them a clear picture of your financial situation.

Don’t file for bankruptcy, unless you really have to.

Many people think that filing for bankruptcy can help them stop foreclosure. But data from the American Bar Association shows that it doesn’t work that way. In fact, 96% of the people who file bankruptcy end up losing their homes anyway—so they’re left with a foreclosure AND a bankruptcy on their records. In some cases, bankruptcy is still a viable option, but don’t make any decisions without getting professional advice.

Do have a backup plan.

Not all people will qualify for a mortgage loan modification. Maybe you’ve fallen too far behind, your lender may be simply hard to work with, or maybe you don’t need it after all. In any case, it’s always good to have a Plan B. Your mortgage modification attorney can help you find the best solution.

If you can’t get your loan modified, talk to your lawyer about a short sale. This involves selling your home for less than its fair market value and giving the proceeds to your lender. Although you still lose your home, it’s not as damaging to your credit as foreclosure, so it’s easier to get back on your feet.

Get Education on Your Rights -Read and Know Before You Do Anything.

Hire a Qualified and Licensed Attorney for Your Loan Modification

The last 5 years is nothing but violations of all kinds of laws including TILA, RESPA and HOEPA by all kinds of lenders including the big lenders. My bad list of lenders include Countrywide, WAMU, and of course Citi. City has already eaten up 40 billion of federal money, and is still teetering on the brinks of a disaster. They are also at the same most arrogant and unhelpful lenders. Most of the foreclosure mess is created by these bankers, including of course many small bankers. They over qualified people who could not handle the burden of loan. These folks should not have been home buyers in the first place. The example, I give quite often is of my son is 10 years old and is in 5th grade. I give him one dollar every day for his allowance. Imagine if I start giving him instead $100 every day for his pocket allowance. It would spoil him in less than one month and show him how to be financially irresponsible. It is another thing if I open a saving account and put $100 in his account every day. Of course that would be a fantastic idea for his college education and bright future.

There is No More Waiting Required— You Waited Long Enough.

The foreclosure process is designed so that you have time to get back on your feet and save your home. But that doesn’t mean it’s safe to procrastinate. The longer you wait, the harder it gets to get you out of that fix. As soon as you decide you need mortgage help, call for a loan modification help and get started.

Who Else But a Qualified Attorney?

Your lenders policies have hurt you too much. Your broker (former) and loan officer along with mortgage bankers and all the other allied people have hurt you much. IN fact, this foreclosure fiasco was caused originally by combination of all these folks and their unlimited greed. Don’t let them continue this game. We all are hurt by this collective deceptive practice. So let us work together and stop it.

Don’t file for bankruptcy, unless you really have to.

Filing bankruptcy is not a solution; at the most it would delay the process. In some cases, it would jeopardize your loan modification process. Remember Automatic Stay under bankruptcy and then affirmation of debts. They are time consuming things. You lose the leverage and deterrence of bankruptcy to use in your loan modification. I never file bankruptcy before loan modification. In fact, in my law office, I keep them separate and never unify them. Because of the knowledge of bankruptcy, foreclosure, and loan modification: an attorney can be uniquely qualified to cover all these areas and knowledge of all these areas, would be very helpful. Just don’t file bankruptcy at the very outset. It may give some time but it is not the solution. Also, please don’t file bankruptcy just for your home loan unless you have lots of unsecured debts

Do Have Any Alternative Plan.

Why Do Lenders Prefer Loan Mod Over Foreclosure?

-Loan Modification is a temporary help. Get qualified for this. There is nothing to be embarrassing in all this issue. Lots of these things had happened out of our control.

-Your lenders are still difficult to work with; they have built fireballs around which you have to cross.  The secret is that by doing loan modification they are helping themselves. On a cost benefit analysis, they lose more money in a foreclosure. It saves money, and this is a time tested factor that lenders save money on loan modification and lose money in foreclosure.

Let us analyze the situation here in greater details.

• Loan modification is cheaper. They deal with one borrower only and not a plethora of people like default agency, governmental agencies, and the auctioneer and furthermore a new person in the entity who is stills an unknown commodity.
• A loan modification takes place in 30 or 60 days while the foreclosure process is long and it has its statutory limitations.
• The paperwork is less in loan modification compared with foreclosure process. In foreclosure, your lender will assess all kinds of late payments, expenses and attorney fees, and of course a repair for the home to make it at least presentable. All these add up in the cost to lender.
• Your lender is tired of foreclosing home. They have a high list of REO properties, and no one is buying them.
• A loan modification process can slow down your foreclosure process but it is not a safe guarantee against the foreclosure.
• However, as long as borrower is talking, communicating with their lenders, they would not or at least hesitate to send their home to the auction block. Ideally speaking, don’t sit and wait for this time to come.
• Do something now. It is the time. It is your home. Find someone who is professionally qualified to help you. It is your local attorney who has a local office, easy to find and communicate and licensed in the State of Nevada.

1. Put everything on paper. It’s not uncommon for lenders, especially smaller ones, to lose track of your application. To prevent delays, make sure all your efforts are documented and kept on file. This includes all the calls you make and receive, both from your lender and loan modification attorney. Keep receipts of all your transactions, and make copies so you don’t have to let go of the originals.

2. Do your own financial statements. Part of every home loan modification is a financial worksheet, which will be your main basis for qualification. Most lenders have their own forms, but it won’t hurt to make your own as well. If your lender insists on using their worksheet, at least you’ll have all the information ready.

3. Be as detailed as possible. Too much information is better than too little, and it limits the chances that they’ll call you for more information. A typical worksheet for a mortgage home work modification will include the following:

• -Your contact information (address, home phone and work phone, fax and email)
• -Information about your property, including the estimated value
• -Your current income
• -Any additional income, such as welfare, child support, etc.
• -Your estimated total value, including other assets such as real estate, savings and checking accounts, IRAs, 401(k), stocks and bonds.

-Liabilities, such as existing loans monthly bills, medical expenses, and tax liens

4. Keep all your bills. Keep track of all of your bills in a methodical order. Make sure you write down your grocery bill, your utilities, including water, power, gas, and trash charges. Now, add on your monthly bill of HOA, any other community charges, your insurance charges, your child support, and other alimony issues or legal expenses. Possibly, a positive cash statements would be an ideal one to work with banks.

Why an Attorney Must For Loan Modification?

We all know it is very time consuming to talk or even to find the right person for a request for loan modification. We are constantly transferred from one line to another and of course to various countries during few minutes. Well, my experience in contacting the lenders has resulted many times in many frustrating experiences as well. However, when I told them that I am an attorney some of the non sense is washed away very quickly. Phones messages starts returning, letters being replied and they cut short the delaying tactics which are meant for almost all of the borrowers. I meet clients all day in reference to their loan modification needs. Here, is the summary of all the experiences what my clients had told me and my office staff in handling their own loan modification requests:

• We were transferred from one phone to another.
• We were transferred to a dead line.
• The average time of greetings last about 5 minutes, and each transferred calls is started again with greeting on the phone.
• You are advised to identify yourself each time.
• You are requested to send the same papers which you had faxed many times before.
• At each layer, the representative would ask you money.
• Each representative would give you same stale information, and invariably the first answer is “there is nothing we can do”.
• Lots of lenders would give you the run around, attorneys know how to stop this waste and cumbersome process.
• Once attorneys are invovled, the collection process stop the harassing calls. All calls are routed to the attorneys office. Furhtermore, only written requests can be made. All the annoying phone calls can be stopped.
• Attorneys can collect and compile all the papers and can start calling the lenders on your behalf.