Who can do help me?
Anyone can help you get a loan modification. In the State of NY, however, only attorneys licensed to practice before the Courts of the State of New York, Mortgage and Real Estate Brokers and a few other exceptions to the rule are allowed to charge upfront fees to handle loan modifications. You, as the borrower are the best person to begin the loan modification process, however the process is long, tedious and in many instances complex. You can go to hud.gov and find free housing counselors that can also assist you but these services are typically overwhelmed and understaffed. A good resource to look at is the NY Attorney General's web site as Mr. Cuomo is attacking all of the scam artist that are taking advantage of those New Yorkers who are having difficulty making mortgage payments and offering help they cannot or do not provide. All those official looking mailing that you receive promising grant money and modifications are solicitations disguised to induce fear.
What do the Lenders Want?
Every lender is a little different but the short answer is 2 years of federal tax returns, 6 months bank statements, 2 months of paystubs and supporting documents to prove additional income such as leases, contribution letters from family, social security benefit letter, etc... if you are Self Employed it becomes more complicated as you will need all of the above plus a profit and loss statement from an accountant, 2 years business tax returns and a few additional papers for supporting documents.
Will the Bank Modify my Mortgage?
A loan modification is a lot like going to court. Sometimes you believe you have best case and still lose. In loan modifications you may have the same issues. We have had clients we submitted with a great case for loan modification who have been denied and others who should never have been approved that were. In many instances it is about packaging more than substance. If you submit a package to the lender that is complete with all supporting documentation and you stay on top of the lender your chances are very good of being approved. If you submit documents in pieces and have contradictory documentation or incomplete packages your chances are significantly reduced as the Lenders are very busy and the loss mitigation employees tend to be more eager to deal with the complete files.
How Long does This Take?
Loan modifications can take as long as six months or more to get through the system depending on the lender and investors involved. They can also be exceptionally fast, in one instance we had a modification approved in three days! The typical time line for a modification from start to finish is 60 to 90 days.
I'm Approved / Denied
If you get approved then read the documents you receive very carefully. Many loan modifications have hidden things in them like reaffirming the debt, waiving defenses in foreclosure, balloon payments, stepped fixed loans etc... also read the instruments to see if you are approved under the Making Homes Affordable guidelines or under some other program. You may only be modified one time under the Federal Guidelines but if you are approved under some internal modification program you can keep your Making Homes Affordable Modification in reserve in case you get in trouble again. If you are Denied submit your package again. Every week new programs are being added by the lenders that you may now qualify under. Additionally, the Making Homes Affordable guidelines are still being worked into the lenders programs. Many lenders have agreed to follow the guidelines but have to date not instituted them as they are still training their representatives and other employees.
If you have tried to get a loan modification on your own or if you decide that you simply can't deal with all the red tape, faxing, calling, submitting, etc... we suggest that you seek help through the free system discussed earlier. There are links attached to this guide that will bring you to Webpages that link directly to housing counselors throughout the United States.
Do I Need a Lawyer?
If time is short, a foreclosure is already going, a sale date is upcoming, or if you would rather pay a little to be more than one of the millions looking for help with the free housing agencies, seek out an attorney who devotes much of his/her practice to this area of the law. Real Estate and Mortgage Banking is non-adversarial in nature so many people think that they too can do it, but there is a learning curve involved in Loan Modification practice and to get the results you require or the information you need one of the best resources is experience. Where this is your first and only modification, it is one of many for the attorney you hire. He or She should have the Net Present Value test available and be able to tell you if you do not qualify for a Modification. Many of our clients attempted to modify on their own or through the free assistance of Housing Agencies before seeking us out for assistance.
If you do not qualify for a loan modification, there are other avenues to look at such as Bankruptcy, Short Sales, Deeds in Lieu of Foreclosure, refinancing under the new programs, etc... an attorney who practices in this area can be a very helpful resource and should be able to explain the advantages and disadvantages of each alternate to Modification.