Watch Out for Fraud in Mortgage Loan Modification!

Watch Out for Fraud in Mortgage Loan Modification- 150x150There may come a time in a borrower’s life when he is unable to make mortgage payments anymore. If the person who is facing foreclosure doesn’t do anything to remedy the situation, he or she will have to give up their home. Having financial difficulties and not affording to pay for your home anymore is very stressful, and there are a lot of people out there who would take advantage of your situation.

Borrowers who have started to miss payments on their mortgage have the chance to get back on their feet and continue to make regular payments through a mortgage loan modification. Unfortunately, fraud in mortgage loan modification is very widespread, and it is easy for people to become the victims of this practice.

Understanding Mortgage Loan Modification Fraud

Mortgage loan modification companies buy borrower payment history info from credit bureaus, and use this information to find potential customers. Loan modification companies will then contact borrowers who are facing foreclosure by phone, mail, or even by showing up at their door. All mailings and solicitations from mortgage loan modification companies will look and sound official. The company’s name may even sound like it is affiliated with the government or like it belongs to a law firm, but usually these are only tactics of getting you to call the company and, more importantly, see them as trustworthy.

Someone from the loan modification company will tell you that he or she will negotiate with your lender to modify your mortgage loan, and give you all kinds of verbal guarantees. They will, often times, say anything in order to get you to do business with them. You will probably hear about the thousands of home owners that they have helped, that their company is attorney-backed, or that they will give you your money back if your lender doesn’t agree to a loan modification. They can go as far as recommend you to stop talking to your lender and let them handle negotiations, or even advise you to pay their fee instead of using that money to make a mortgage payment.

Another way in which people who are dealing with financial difficulties are preyed upon by scammers is through a new loan scam. The borrower is offered temporary financing that will get them through the hard times, until a more permanent form of financing is arranged. This is done with the condition that the home owner signs over the ownership to his home to the scammer.

Usually, all these scammers do is get as much money as they can from you upfront, while keeping you in the dark about what is happening, after which they simply disappear, leaving you in a much worse situation than you were before.

How to Avoid Fraud in Mortgage Loan Modification

Avoiding getting scammed by people who try to take advantage of you when you are most vulnerable financially is fairly easy if you just keep your calm and use a bit of common sense. Here’s how you can protect yourself and your home form fraud in mortgage loan modification:

  • Don’t trust any exaggerated claims and guarantees. Mortgage loan modification companies that claim that they have a near 100 percent success rate, or that they guarantee to get your lender to agree to a loan modification, are most likely telling you what you want to hear in order to get you to hire them. Checking your local Better Business Bureau or other such organization won’t guarantee that you are hiring a good loan modification company, but it will, at least, ensure that you won’t be getting scammed.
  • Don’t pay fees upfront. In many states, there are laws that prohibit mortgage loan modification companies from charging you upfront. Even if your state doesn’t have such a law, beware of companies who charge you large fees upfront, especially if the company is fairly unknown.
  • Pay your mortgage instead of the loan modification company. Some companies may advise you to pay them instead of your lender. This is something that you should avoid because you will probably end up in an even worse financial situation than before.
  • Contact the lender yourself. Don’t allow mortgage loan modification companies to sever the ties between you and your lender. Negotiating a mortgage loan modification is a relatively easy process, which can easily be done by yourself. Also, don’t ignore your lender’s calls and letters, because this may be the difference between getting approved for a loan modification and going into foreclosure.

Fraud in mortgage loan modification is very common, especially in times when more and more people are having trouble paying mortgages. If you don’t have the time to handle this yourself, or think that you don’t have the necessary knowledge, then hiring someone to help you with your loan modification is a logical step. But before you seek the help of a mortgage loan modification company, make sure that they are legitimate, and won’t cause you to end up in an even worse situation than you were in initially.

Top 10 Loan Modification Lenders

Top 10 Loan Modification Lenders-150x150Many Americans have been affected by the recent economic crisis. Millions of homes have gone into foreclosure, and millions of families have lost their homes. If you are at risk for losing your home, the good news is that there is something you can do about it, but it largely depends on your ability to get back on the right track financially. If your lender agrees to a mortgage loan modification, you have a good chance for saving your home from foreclosure, and avoid the nightmare of losing your home.

Mortgage lenders are not required to agree to a loan modification, so it is up to you to prove to them that your own financial crisis is only temporary, and that you will be able to start making payments on your mortgage again. Not all lenders are created the same, so here is a list of the top 10 loan modification lenders:

Top 10 Lenders

1. Wells Fargo & Company: As of March of 2013, Wells Fargo, whose vision is “We want to satisfy all our customers’ financial needs and help them succeed financially”, is the best ranked financial institution in market value in the country.

  • The company has its headquarters in San Francisco, but serves its U.S. and international customers through their 9,000 stores, their website and their 12,000 ATMs. Wells Fargo offers their 70 million clients worldwide services such as banking, mortgage and insurance, and is an industry leader in the U.S., being the first ranked retail mortgage lender and mortgage servicer in the country.

2. JP Morgan Chase:  One of the largest financial services company in the world, JP Morgan Chase started its business more than 200 years ago.

  • The firm has assets of $2.4 trillion, and operates in the Unites States, as well as internationally, in more than 60 countries.
  • Some of the services offered to the U.S. customers include credit cards, home finance, education finance, retirement, auto finance and investing.

3. Citigroup: Citigroup opened its doors for the first time in 1812. It only had 1 branch and 22 employees. Today, it is one of the best-known financial institutions, operating in 160 countries and territories, and employing more than 260,000 people.

  • Since 2007, Citigroup, through Citi Mortgage, has helped over 1 million people to avoid foreclosure. The company also launched its Road to Recovery program, to support afflicted U.S. homeowners.

4. Ocwen Financial Corporation: With an experience of more than 20 years, Ocwen is the leading high-risk loan servicer in the country.

  • Ocwen is based in Dunwoody, Georgia, but has offices in other cities across the country, too, and has a license to service loans in all U.S. states and territories.
  • Since February 1, 2013, GMAC Mortgage transferred part of its loans to Ocwen.

5. Bank of America: This multinational financial corporation is one of the country’s largest bank holding companies. Along with its competitors, Wells Fargo, JP Morgan Chase and Citigroup, Bank of America is one of the Big Four banks in the U.S.

  • Bank of America and its subsidiaries, Merrill Lynch and U.S. Trust, offer its clients a wide range of services, such as consumer banking, mortgage, corporate banking, credit cards and wealth management.

6. U.S. Bank: The 5th largest bank in America, U.S. Bank, has assets totaling more than $355 billion. The company offers financial services to consumers in more than 25 U.S. states, and has operations in Europe and Canada, as well.

  • U.S. Bank was ranked first in customer satisfaction three years in a row (2010-2012), and over the years has received numerous rankings and awards.

7. PNC Bank: PNC Bank is the main subsidiary of PNC Financial. The firm is headquartered in downtown Pittsburg, PA, and has over 50,000 employees.

  • PNC is one of the country’s top mortgage lenders, with a loan portfolio of $122 billion. The company has over 90 mortgage offices in the U.S. and 2,800 Retail Banking stores, where its customers are served by knowledgeable mortgage professionals.

8. SunTrust Bank: This financial firm was established in Atlanta, Georgia, and operates in several states in Southeastern U.S.

  • As of March 2013, SunTrust has $173 billion in assets, and approximately 30,000 employees, who work together to offers quality financial services to U.S. clients. Some of the bank’s offerings are mortgage banking, credit and deposit services, retail banking, as well as insurance, asset management and mutual funds.

9. Provident Funding: Provident was founded in 1992, and is the country’s second largest private mortgage firm.

  • The company is licensed in 47 U.S. states, has a $60 billion loan servicing portfolio and more than 280,000 clients.
  • Freddie Mac’s “Top 25” ranked Provident the best servicer for default management, and it also named the mortgage company “Hall of Fame Servicer”.

10. Branch Banking & Trust Company (BB&T): Headquartered in Winston-Salem, NC, BB&T operates in 12 states, has over 1,800 branches and more than 30,000 employees.

  • BB&T received many awards, and is recognized by J.D. Power and Associates for outstanding customer satisfaction.

Having an open line of communication with your lender is very important, and will help you to easier reach an agreement with them. Lenders are not obligated to give you a mortgage loan modification, but being upfront and honest with them will certainly increase your chances of saving your home from foreclosure, and painlessly get back on your feet financially.

Need Assistance with Mortgage Loan Modification? These Services Can Help!

Need Assistance with Mortgage Loan Modification- These Services Can Help- 150x150Owning a home is a common goal that people have during their lifetime. Unfortunately, during times of economic unrest, owning a home can turn into a nightmare if you are unable to pay your mortgage anymore. The prospect of losing your home is frightening, and it’s something that will affect you financially and emotionally for a long time. Besides having to give up your home, the whole process will have a big impact on your financial situation, making it extremely hard or even impossible for you to be able to qualify for a new mortgage in the near future.

If you find yourself in danger of losing your home, saving it from foreclosure should be your main objective, and one way you can do it is by getting your lender to agree to a mortgage loan modification. Time is of the essence here, so calling your lender as soon as you notice any signs of trouble will increase your chances of getting approved for a mortgage loan modification. Lenders are not obligated to agree to a loan modification, but they want to avoid foreclosure as much as you do, so it is important for you to make sure that a mortgage loan modification is the way for you to get back on your feet financially, or else it would just be a waste of time for both parties involved.

Do You Need Help With the Mortgage Loan Modification?

A mortgage loan modification will probably involve several long discussions with your lender, and many home owners may not have that much free time, so hiring someone to do it for them could be the right choice, in this case. The truth is that the borrower can do most, sometimes even all, of what the mortgage loan modification professional can do. The most important thing here is to pay your mortgage, so hiring someone to do something that you could do yourself, would just be a waste of money, which could be used to get you out of this situation quicker.

But some people just won’t have the spare time to deal with a mortgage loan modification, so hiring someone to do it instead makes more sense. Others may think that they don’t possess enough knowledge on the subject to deal with loan modification themselves, in which case it also makes more sense to seek help, whether it’s from a professional, a relative or a friend.

Who Can Help With a Mortgage Loan Modification?

If you think you can’t tackle pursuing a mortgage loan modification yourself, or you simply don’t have the time to deal with it, then the next logical step is to hire someone to help you with this process. One place where you can look for help is non-profit loan modification organizations. Non-profit organizations, such as the Association of Community Organizations for Reform Now (ACORN), GreenPath, National Urban League, United Way, or Catholic Charities have offices all over the United States and are qualified to work with you and assist you with the mortgage loan modification process.

Another popular option for those who can’t deal with a mortgage loan modification themselves is to hire an attorney. Attorneys who specialize in mortgage loan modifications can offer you the proper guidance and discuss with your lender on your behalf. Hiring a professional is the best way of ensuring that the process goes smoothly and that everything will be handled with the utmost care and professionalism. If hiring an attorney is too expensive for the borrower, then contacting a local counseling service could be the next best option.

A third option when seeking help with your mortgage loan modification is to hire a mortgage modification company. Many times, these types of companies will overcharge you, often upfront, and provide no guarantees for something that you could easily do on your own. You have to remember that obtaining a mortgage loan modification is in your best interest, so hiring someone to give you advice is recommended, but hiring a company to do everything will probably not produce the same results, and it will cost more.

Needing assistance with your mortgage loan modification is nothing to be ashamed about. You are, after all, trying to save your home, so any bit of help matters. But before you go out and spend money on the services of a mortgage loan modification company, try to do a little research and find out if you won’t be better off doing things yourself. Receiving help from an attorney or someone who has experience with loan modifications, especially if you don’t have enough time to do everything yourself, is also a great way of making sure that you won’t have to go through a foreclosure and lose your home.

Mortgage Loan Modification: How Can You Benefit?

Mortgage Loan Modification-How Can You Benefit- 150x150Many events can affect your ability to pay your mortgage, especially in times of economic unrest. Changes in the housing market, losing a job, or even divorce or illness can have a huge impact on your financial situation. Not being able to make payments on your mortgage anymore is a home owner’s worst nightmare, because the time to recover is short, and you will be in danger of losing your home.

If you find yourself in this situation, you should know that you have at least one option to keep your home and continue to pay for your mortgage. This option is called mortgage loan modification, and it might be just what you need in order to avoid having to give up your home.

What is Mortgage Loan Modification and How Does It Work?

A mortgage loan modification involves modifying the terms on your mortgage loan, by your lender. Mortgage loan modification can affect the interest rate, the total loan amount, or the type of mortgage loan. The object is to make your mortgage easier to pay, usually by lowering your monthly payments. If you are late on your mortgage payments, the lender might agree to a loan modification, which will give you the chance to get back on track and allow you to pay the late mortgage payments, and modify the loan in such a way that will make your life easier. Mortgage lenders are not required to agree to a mortgage loan modification, but they will prefer it to foreclosure.

You could try to get refinancing instead, but if you are already late on your monthly payments, this will reflect on your credit score, thus taking refinancing out of the equation. If you decide to go ahead and apply for mortgage loan modification, then you should contact your lender as soon as possible, and complete an application that lists your financial situation.

If you are being offered a mortgage loan modification, make sure that you carefully compare all the terms to your original mortgage loan. The goal here is to make things easier for you financially, not ending up regretting the decision in a few years or even sooner. Take a close look at your remaining loan balance, the interest rate that is offered, the type of interest rate, penalties, fees, and, of course, what your new monthly payment will be.

Benefits of a Mortgage Loan Modification

A mortgage loan modification will save you from losing your home, so it’s in your best interest to receive one from your lender. Lenders are also at an advantage, because they will prefer having someone live in the home and paying mortgage for it, than having to go through foreclosure and having to sell your home. Here are the most essential benefits that a mortgage loan modification has:

  • Mortgage Loan Term Extension. By extending you loan’s repayment term, you will be able to reduce your monthly payment significantly. You will probably have to pay more in interest over the life of the loan, but at least it saves you from foreclosure, and it’s an even better alternative if you don’t plan on remaining in that home for a long period of time.
  • Interest Rate Reduction. Your lender might agree to reduce your interest rate for a while if that would get you back on your feet financially, and back to making regular mortgage payments. Even if it’s for a short period of time, having to pay a lower interest rate can really help you recover from a financial crisis. Refinancing is the only choice that you have of reducing your interest rate permanently, but it might not be an option at this point.
  • Principal Forbearance. Your lender might agree to allow you to pay no interest on part of your mortgage loan, but you will still have to pay the entire principal when your home is sold or refinanced, or when the mortgage loan reaches its due date.
  • Principal Reduction. Probably the best way of having your monthly payment reduced, principal reduction means that the lender reduces the principal that you owe, and you won’t have to repay that part of the loan.

Mortgage loan modification can mean the difference between a home owner keeping his house or going into foreclosure. It’s not that simple to qualify for a mortgage loan modification, but, if you do meet the requirements, make sure that you do the proper research and understand how your mortgage loan will be modified. Mortgage loan modification is a great way of helping you recover from financial trouble, and avoid having your home taken from you.

Top 10 Tips for Mortgage Modification Success

Top Ten Tips for Mortgage Modification Success- 150x150

Mortgage modification can be a saving grace for many people, but others are thoroughly disappointed when a seemingly sure thing is denied to them. Lenders may appear to render assistance to all of their customers, but statistics indicate that the cry of homeowners for mortgage modification has fell on deaf ears. However, if you start the process well-informed and a few steps ahead, you have a much better chance for your mortgage modification request to be successful.

Reasons for Denial of Mortgage Modification Requests

  • Ineligibility. The Federal National Mortgage Association (FNMA) cites several requirements for the eligibility of an applicant. One of them is that the loan should have originated before 1st January, 2009. The modification is allowed only once under the program. If it has been modified before, you are disqualified.
  • Insufficient documentation. FNMA provides a list of all the documents that you should present along with your application forms. This includes your detailed credit report, all of your income sources, and a fully signed IRS 4506-T as proof of income. If you fail to provide all of the documents you will not qualify.
  • Type of mortgage. Both fixed rate and adjustable mortgages qualify for modification but interest-only mortgages do not qualify. In an interest-only mortgage, you pay back the interest first within a given period of time after which you start paying the principal.
  • Level of mortgage expense on the first lien. The FNMA has placed a special cap on the level of mortgage expense, given the household income. If it is already below 31% of your total household income, you will not qualify.
  • Payment defaults. Some mortgagors are very strict with mortgage modifications. As a measure of ensuring that you will not land the firm in financial loss, they will look at your credit report to ensure that you have no default or missed payments. The presence of a late payment or missed payment in some cases will warrant a direct disqualification for mortgage modification.

Tips for Mortgage Modification Success

  1. Ask questions. Before striking a deal with the lender, know exactly what that mortgagor provides. There could be a misunderstanding in the deal that may lead to future problems. Mistakes can be avoided by asking questions to ensure clarity.
  2. Remain persistent. Many homeowners usually become frustrated when their mortgagor asks them to resubmit their documents once again. If you really need the mortgage modification, you should cooperate with the lender as much as possible and remain persistent throughout the process.
  3. Seek professional financial help. Are you an amateur in the mortgage modification process? If you are not mortgage savvy, it is better to seek professional help from a loan modification firm or an attorney. However, you should avoid revealing your private information such as credit card details to anyone except your lender. The firm or attorney should be approved by HUD. Do not pay any upfront fees.
  4. Know your lender. Knowing enough information about your selected mortgage modifier can help you to obtain a better modification. If you find out that the bank actually owns the loan then you stand a higher chance of enjoying more flexible terms. This you can do by directly asking the mortgagor or by visiting Fannie Mae and Freddie Mac online, then inputting your address to find out whether the loan is with Fannie Mae or Freddie Mac.
  5. Be very honest. Along with your application forms, the lender requires a significant amount of financial information about you. To streamline the process, give the lender all of the details that they require. Don’t fudge any numbers on the forms in order to make yourself eligible- that could catch up with you in the form of foreclosure. Some of the details that may be required of you include your monthly gross income, recent income tax return, savings, other assets, details of your first mortgage, account balances from your credit cards, minimum monthly payments due on all your credit cards and an explanation as to why your income has been reduced.
  6. Present an ideal financial hardship letter. This is a polite and detailed explanation about how you found yourself in a deep financial mess. The letter is very important because if your mortgage modification servicer is not convinced with your openness they will have questions as to how straightforward you will ever be. Do not leave any important point out. Be sure to include exact numbers and dates.
  7. Be realistic. Your job in the loan modification process ends once you submit all of the required paperwork. Then you will wait until you receive the interest rate offer. In case it is too high for you to repay, don’t sign the deal. Explain to the loan sales executive about the constraints on your budget so that you can manage repaying with relative ease. This is not desperation but realism.
  8. Document everything. Keep a record of everything discussed and determined each time you speak to a lender or receive some correspondence. The importance of having a track record of all these details is that you can use them to your defense when a foreclosure knocks at your door. You should also use only certified shipping companies so that some lenders won’t claim that they sent you some documents that you never received.
  9. Be flexible and patient. Don’t apply for a mortgage modification and be dead-set on how you expect the process to go. The whole process may take 30 to 90 days before approval. Even if you were told to wait for a call, if by the end of the agreed period there is no response, then you can courteously follow up to find out what the status is on the process. Patience pays at the end of the day.
  10. Proof of income. Lenders require all homeowners to provide proof of their income. This you should do not only by providing valid income documents but also a duly signed IRS Form 4506-T that allows the mortgage servicer to access your federal tax returns. In many institutions, this is the leading reason why many applicants are denied mortgage modifications. Learn more about the documentation process for mortgage loans.

Mortgage modification enables you to enjoy lower interest rates and manageable monthly repayments. If you have suffered a financial setback through injury, a natural disaster, divorce or any other misfortune, mortgage modification may provide the relief you are looking for to move forward positively with your finances.