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Don’t use anyone saying they can do a loan modification without checking on State Department of Real Estate website first. If they are NOT on this list do not pay any money in advance.
Modification FRAUD is rampant and you need to protect yourself.
Anyone who says they can do a loan modification here in California needs to be a licensed Real Estate Agents or Licensed Attorneys. No one can guarantee you a loan modification.
Don’t ever make loan payments to anyone EXCEPT your mortgage company. Do NOT sign anything transferring title of your home to anyone-you are still responsible for the payment
It is illegal for a a loan modification company to collect up front fees in California if you have received a notice of default.
What you should know BEFORE you Call
Lender adjusts the terms and/or condition of your existing loan. They may reduce the principal, reduce the interest rate or extend the years on your loan. (Less than 2% of the loan modification have a reduction in the loan principal amount.) It usually takes 3-4 months for a legitimate loan modification.
Unfortunately, Fannie Mae failed on loan modifications especially here in California where the value of the homes have gone down and most homeowners owe more than 105% of the market value.
There is a lot of fraud in loan modification which is why you MUST check out the Department of Real Estate website to check these loan modification people out.
What some Lender’s Offer on Loan Modifications
- Temporary reduction 1-5 years of reduced interest rates
- Forbearance Agreement past due payments and penalties & interest rolled into your payment until paid – This is NOT a good option
- Extending the loan terms – taking a 30 year loan to 35 or 40 years
- Principle Reduction option reduces principle to current market value
- FDIC Solution interest rate reduction with gradual increases along with a balloon payment at the end of the loan
- FHA (Hope) waiting for program to reduce principle of loan to market value but Lenders could chose if they wanted to participate. They are back at the drawing board to offer this.
What Your Options Are if Your Loan Modification is Denied
- Walk away, which ends up in Foreclosure and damages your credit
- Deed-in-Lieu of Foreclosure avoids Foreclosure process but it will still effect your credit
- Short Sale, sell home for less than what you owe. Helps preserve your credit. (Requires you calling and listing your house with a Realtor)
Which Lenders Are Cooperating With Loan Modifications:
Countrywide
Chase
EMC
AHMS
Aurora Loan Services
Wilshire Credit
Lenders That Are Difficult to Work With (outsourced over seas)
GMAC
Wells Fargo
Washington Mutual
Downey Savings
World Savings/Wachovia
HSBC
IndyMac (requires 90 days late before being considered)
For more information click Loan Modification (this is a non-profit organization) or call 1-888-271-9767
I hope this helps those troubled homeowners and sheds a little light on a very difficult situation for you.
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and read what other home buyers and home sellers have asked and feel free to ask your Real Estate question by email. Perhaps, your question will be part of the next article featured on Sacramento REAL Estate 
This is FABULOUS!!!!!!!
I am your newest subscriber.
Glad you found what you needed, Yvonne. That’s my goal…to help the consumer. Glad to have you aboard on Sacramento Real Estate Voice.
Loan modifications are a waste of time if you owe way more than the house is worth. They modify your loan for only 5 years then what? Your screwed again but this time the lender has less of a loss to take and they will foreclose. I am getting a hedge fund to buy my note and giving me a new note that is 90% of todays value. I do like your website.
I personally dread loan-taking. This is because some lenders put across some tough penalties that may be at times quite threatening. You may not enjoy spending the money since it has been lent under very strict regulations.
A loan modification is a great way to lessen the amount of pressure mortgage payments put on you. Loan modifications change the way your payments work.
That’s true as long as the homeowner qualifies for a loan modification. Lately, those who have contacted me have not been given a reduction in the loan amount but had it spread over a longer period of time, with lower interest rate thereby reducing the amount of the payment per month.