Written by randall on January 30, 2010 – 12:55 am
A Loan Modification is a permanent change in one or more of the terms of a mortgagor’s loan, allows the loan to be reinstated and results in a payment the mortgagor can afford.
With this in mind, one must remember that when a consumer for a “loan mod” contracts a company, the borrower is hiring a negotiator to represent them in this transaction. Loan modifications are not a product that you buy. There are no cans of loan mod in any store, over the Internet or at any bank. This concept of “buying” a loan mod has been the fuel for controversy since the beginning of this movement to modify loans. Because of the vast market share of potential clients, mortgage brokers feeling that they were more qualified than anyone to work on mortgages got into the business, as mortgage business dried up.
Attorneys who also wanted a share of this vast new pool of clients began an assault against the mortgage brokers saying that only attorneys could perform a loan modification. This is true if the borrower has received a Notice of Default from the bank. If the borrower has not received a notice, then what? This question ignited the controversy that led to new legislation to prohibit upfront fees for modifications. This was a huge win for the attorneys. Keep in mind that you “retain” an attorney and retainers are nonrefundable. Fees are refundable and you don’t retain a broker, and a broker can be sued and lose his license. It is tough to find a lawyer to sue another lawyer.
Not being an attorney or a mortgage broker, if a person negotiates a loan modification for himself and he is a plumber, is it a true modification? If the answer is no, then he’d better go to law school before anyone finds out and retracts the modification, if the answer is yes, then what was all the controversy all about?
The controversy and attention should be on the banks that encourage late payments and employ tactics that prohibit a timely modification, all the while getting money from the US Treasury and the FDIC. Trial periods are being offered as relief, but if you re-read the definiation of a loan modification, it has no reference to anything on a trial basis.
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No cash down mortgages have grown to be widely accepted and used lately and rightfully so.