Loan Modification Frequently Asked Questions:

What is a loan modification?  A loan modification is an agreement changing some of the terms of the original note that you received when you obtained your loan.  It is NOT a new loan.  Some of the terms that are frequently changed are interest rate, term, principal balance, amortization rate, etc.  Whatever terms are to be changed or modified are explicitly set forth in the loan modification agreement, all the other terms and conditions of the original note remain the same.

How will the $25 Billion dollar AG settlement affect my chances at obtaining a loan modification?  Although the recent $25 Billion AG Settlement (“Settlement”) does not apply to all lenders and all loans, it should have an effect on those to which it does apply.  The Settlement should allow for changes to the underwriting guidelines which will provide the underwriters with more flexibility and tools, including principal reductions.  I have seen the positive results in this already.  I have seen large principal reductions from Bank of America.  I posted these online so you can review them for yourself by clicking on the Successful Trials and Modifications link on my website.

Are Principal Reductions Real?  In short, yes.  However, it depends on what lender you have and who your underlying investor is.  Some lenders absolutely do not allow for principal reductions while some have been doing so for years.  Ultimately, it depends on who the actual investor on your loan is.  Some of the lenders that I have seen principal reductions from are Chase, OneWest Bank (Indymac), Wachovia, America’s Servicing Company (ASC) and more recently, Bank of America.  Principal reductions are not an entitlement but a tool that investors can use in attempting to modify your loan.  No one should go into a loan modification expecting a principal reduction.

Can I modify my loan if I have equity?  Loan modifications are a loss mitigation tool utilized by investors to mitigate their loss.  Loan modifications are primarily for the benefit of the investor.  When an investor is faced with a loss scenario the investor will analyze all potential avenues of relief in an attempt to determine by which avenue the investor will lose money.  If your house has equity then the investor stands to lose little or no money by foreclosing but stands to lose a significant investment by modifying.  In other words, attempting to modify when you have equity, while not impossible, is extremely difficult.  Most people who attempt to modify with equity get denied for NPV.  The higher that your LTV (the greater the amount you are underwater) is the greater chance you have of obtaining a loan modification as the investor’s risk of loss is higher.

What does it mean when I was denied for NPV?  A denial due to Net Present Value or NPV means that the investor, after analyzing all pertinent information has determined that the investor will lose less money by foreclosing than by modifying.  However, just because you received a NPV denial from your lender does not mean that the NPV is accurate or that the lender processed your loan modification correctly.  I frequently meet with clients that have been denied for NPV, sometimes several times, and found either mistakes in the NPV or omissions that eventually allowed me to obtain a loan modification for the client.  In other words, if you have been denied for NPV, I strongly recommend that you contact me for a review of your situation.

I have already used other attorneys and companies to try and modify, what makes you different?  A large portion of my clients have already tried to modify their loans using loan modification companies, attorneys or non-profit companies.  The reason that I succeed where they fail is because I am not only an attorney, but also a real estate and mortgage broker.  In essence, I speak the same language as the underwriters reviewing your loan modification application and the fact that I am an attorney aides me in getting them to listen to me.  I have been assisting people with loan modifications for over 4 years now.  During that time I have established very strong relationships with the lenders who have come to respect my knowledge and approach in addressing loan modification applications.  I spend a tremendous amount of time attempting to learn the underwriting guidelines at the various lenders and for various investors.  By understanding the rules provided by the investors to the lenders for reviewing loan modification applications I can look at a client’s loan modification application like the bank does which allows me to provide you with insight into your chances at obtaining a loan modification.

I have been told that loan modifications are nearly impossible to obtain and that a short sale is my best option?  Loan modification are real and they are issued by the lenders.  Your odds of obtaining a loan modification yourself or by using an inexperienced or inadequate representative are significantly lower than if you use a person or entity well versed in how loan modifications work.  As I mentioned, most of my clients have been working on their loan modifications for long periods of time or have used 3rd parties to try and modify their loans.  On my website I have posted a large number of actual modifications and trials that I have been able to obtain for my clients.  Look through them and determine for yourself whether loan modifications are for real.  No matter what you do, if you really desire to try and keep your house do not be pushed into a short sale by anyone.  If you determine that a short sale is the best option for you, only do so after you have explored and investigated all of your options.

Can you guarantee that I will receive a loan modification?  I can tell you that I will put my money where my mouth is.  I will not take your case unless I think I have a high probability of succeeding.  I have a money back guarantee.  If you contract me to help you in all 3 phases of the loan modification process and if I am not successful in obtaining a final modification for you I will refund 100% of any money that you have paid for any of the 3 phases.  In other words, if you win, I win.  If you lose, I lose.  Restrictions apply so please read the guarantee form in order to fully understand the parameters.  Therefore, if I take your case it is because I have determined that you are a good candidate and I am willing to take the risk.

I am self-employed and have several sources of difficult to prove income, can I still modify?  My experience has indicated that self-employed people have a more difficult time modifying than W-2 wage earners.  The reason for this is complicated but, to be brief, it is because self-employed people have a more difficult time conveying their financial situation to the lender.  Whatever sources of income that you might have, the lender is looking for the representation of your financial package to look a certain way.  Many self-employed people are denied when they should not be.  It is my job to make sure that your financial situation is properly conveyed to the lender and that any idiosyncrasies are either properly explained or fixed.

I received a previous modification will my lender consider me for another loan modification?  The general answer is yes.  My experience has indicated that most lenders/investors will allow for up to 2 loan modifications during the life of your loan.  However, most lenders require that you have made a minimum number of payments on a previous modification before you will be allowed to be considered for another loan modification.  The number of payments that are required vary from lender to lender but a good general rule of thumb is 12 payments.