Frequently Asked Questions

Q: What is a Loan Modification?

A loan modification is a written agreement between you and the lender to change the terms of your existing loan. Typical loan modification agreements involve converting an adjustable loan to a fixed rate loan, lowering interest rates, extending the length(term) of the loan, waiving late fees and costs and reducing the principle amount owed.

Q: Can I do the Loan Modification myself?

Of course. But do you really want to? By way of analogy, if you are sued or want to sue someone, do you really want to act as your own attorney even though you have the right to do so? If you do represent yourself and are successful in obtaining a loan modification, you probably won’t be getting the best terms available. Unless you are familiar with mortgage law, what loan modification programs are currently available and statutes such as RESPA, TILA, Regulation Z, HOEPA, etc., you won’t be able to evaluate your options and you won't know if you have valid claims against your lender that will enhance your ability to persuade or coerce your lender into offering the most favorable modification terms. Not knowing your strengths weakens your bargaining position even before you begin.

Q: How long does it take to modify a loan?

That depends on the lender and your particular circumstances. Loan modifications can sometimes be finalized in a few weeks or less, but more often the modification process takes several months to complete.

Q: If my foreclosure sale date is approaching, is there still enough time to do a Loan Modification?

In most cases, yes. If complete and compelling documentation is promptly provided to your lender and a realistic workout proposal is offered, many lenders will agree to postpone or suspend foreclosure proceedings pending final action on your loan modification. However, some lenders are overwhelmed with loan modification requests and the longer you wait, the greater the risk of foreclosure simply because the system cannot process your application quickly enough.

Q: Who should I choose for a Loan Modification?

You have three choices: (1) Do it yourself, (2) hire a so called “loan modification” company or (3) retain an attorney. Doing it yourself is risky unless you have a background in real estate or the mortgage industry. Using a loan modification service can also be risky since no state or federal agency licenses or regulates these companies. Watch out for terms like specialist and certified specialist since these terms are meaningless and self serving. Utilizing the services of an attorney at least assures you of a minimum level of experience and expertise. Attorneys have an ethical duty to represent your best interests and provide services in a competent manner.

Q: How can I tell the difference between a loan modification company that is attorney driven and a Loan Modification company operated by unlicensed individuals?

That’s easy. First look for a street address on their website. Does the company have a real office with a real staff that you can visit or is it only the email address of some individual working from home or garage. Is a money back guarantee offered. Lawyers are barred by the rules of professional conduct from guaranteeing results or outcomes. If a guarantee is offered, the company is not attorney based. Guarantees sound great, but how do you get your money back when the only address you have is an out of state email address? Finally if the website says they will refer you to an attorney instead of in house counsel, the company is not attorney owned or operated.

Q: Do I need a special type of loan to qualify for a Loan Modification?

No, loan modifications are available for FHA, VA, Freddie Mac, Ginnie Mae and conventional loans, though each institution has somewhat different guidelines.

Q: Should I file bankruptcy to stop the foreclosure?

That depends on a lot of factors. Do you want to keep your home or walk away? If you want to walk away and have no equity except for a homestead, Chapter 7 could work for you and discharge your mortgage debt. If you file a Chapter 13 Bankruptcy do you have enough income to pay all of your secured creditors, plus the trustees monthly 10% fee(and possibly unsecured creditors as well) under a three to five year payment plan? Chapter 13 will work if you have the right finances and can budget, but many who file under Chapter 13 ultimately default on the plan and lose their home.

Q: Are there alternatives to foreclosure if I can’t qualify for a Loan Modification?

Yes. In addition to bankruptcy, lenders may agree to a short refi, a short sale or a deed in lieu of foreclosure. Having a legitimate hardship helps the lender morally justify its position. But ultimately lender cooperation is dependent on demonstrating to the lender that it is in the lender’s financial best interest to accept an alternative to foreclosure, i.e., that the lender will lose less with one of those alternatives than in a foreclosure sale.

Q: I’m in foreclosure. I don’t want to file bankruptcy. I can’t sell or refinance my home and the lender hasn’t agreed to a Loan Modification. Are there any other options?