The Home Series: Saving Your Home?
In part two of this three part series I spoke with a Loan Modification Officer who works in an office in Irvine, California. While she was eager to answer my questions her company wanted both her and their business name to remain unknown. We don’t know why that was the case. In any event, for people struggling with their mortgage and who are also heading toward foreclosure, Loan Modification may be the saving grace. A word of caution: Legitimate loan modification programs don’t take your money upfront; they charge you only after they have confirmed they can help you. Below is my interview with a Loan Modification Officer whom I have called Ingrid.
Lana: What is Loan Modification?
Ingrid: It is a NEW contract between the borrower and the lender modifying the original terms.
Lana: How does Loan Modification work?
Ingrid: The Mortgage Loan Modification process provides for either a permanent change in one or more of the terms of a borrower’s loan. This change allows a loan to be reinstated if the loan is behind or past due and results in a payment the borrower can realistically afford.
Areas of change can include:
1. Extending the length of the mortgage loan, as appropriate.
2. Reducing the mortgage loan interest rate.
3. Deferring a portion of the principal, which will require the borrower to make a balloon payment when the loan matures, is paid off, or is refinanced.
Lana: What criteria do people need to meet to be considered for a loan modification?
Ingrid: For specific criteria people should consult Fannie Mae and Freddie Mac.
In the interim, some criteria include:
1. Mortgage loans needed to have originated on or before January 1, 2008.
2. Borrowers need to be at least three or more payments past due and are not currently in bankruptcy.
3. Borrowers need to own and occupy the property as a primary residence.
Lana: What do you do as a Loan Modification Officer?
Ingrid: I work for an Investor Company. This company becomes the Note Holder. We want to help our customers keep their homes by stopping the foreclosures.
Lana: Does Loan Modification really work?
Ingrid: We are helping our customers to modify their loans and they are very happy with our service. We are helping them to save thousands of dollars by reducing the interest rate. That reduction is a loss for the investor and a gain for the borrower.
Lana: What are the pitfalls of Loan Modification, if any?
Ingrid: For our own customers there are no pitfalls.
Lana: Are there certain Loan Modification companies that borrowers need to be cautious of?
Ingrid: I recommend that people call their bank directly and ask them who the Master Investor or Note Holder is on their loan and to call them directly. The investor may or may not help them to modify their loan.
Lana: Is there anything else you could say that will help people?
Ingrid: I do not recommend borrowers go to a third party, as the process could take months and they may not get the results they expect.
Lana: Thanks for your time, Ingrid.
Ingrid: My pleasure. I hope borrowers do their research and become educated on their options.
…For the upcoming third part to this three part series I present an interview I conducted with a Real Estate Agent. She talks about buying a home in this uncertain economy.
Edited by: Lana Marconi. For more information on Dr. Lana Marconi’s private therapy practice in the Orange County, California area, and to download her self-help books visit: www.drlana.com.
Photo credit: stock.xchng.