Loan modification companies ("LMCs") provide their clients with valuable services and are contributing to helping solve the foreclosure problem in the United States. A good loan modification company can help you stop foreclosure and save your home.

Why are we not hearing this? Well, the answer is that there’s not a lot of good press out there about companies that help consumers get a loan mod. In fact there’s nothing but bad press out there about companies that help people get a loan mod. The federal government and the media all say don’t hire a LMC, you can do this yourself. Don’t pay someone to get something that you can get for free. Go to a HUD approved non-profit credit counselor for help. This is the type of press we hear out there about LMCs.

I am going to add some good press about loan mod companies with this article.

Here’s some reasons why people should hire LMCs to handle their loan mods:

When you call the loan servicer, you will have to stay on hold for long periods of time before you will be allowed to talk to a live person. Most of us work and do not have the time nor the patience to stay on hold to talk to some hourly clerk in the collections department who does not have any authority to help us. LMCs have the time, patience and know-how to navigate the automated phone systems and to get the right person on the phone to help.

When borrowers get through to a live person they are being offered forebearance options (catch up plans) rather than true modification of their loans. LMCs act as advocates and can take the immediate position that their client will not accept anything less than a fair and reasonable loan mod.

A successful loan mod handled properly can keep a borrower in their home and help them avoid foreclosure. A borrower who calls once or twice and gives up when he or she cannot get through to someone who can help them will likely lose their home in foreclosure because they did not have an advocate handling their case.

The free HUD counselors cannot provide you with the dedicated we won’t give up attitude and service of a LMC. LMCs have dedicated staff with established follow up procedures and timelines to make sure that each client’s case is getting the attention it deserves.

Author:

Ken J Block is a mortgage professional and attorney at law

You can follow Ken Block on Twitter at http://www.twitter.com/kjblock

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Many loan modification companies are small, entrepreneurial firms that provide a vital service needed by banks, yet which they have failed to develop adequately in-house. The most trustworthy loan modification companies offer attorney based loan modification and a money back guarantee should they not be able to successfully lower your monthly mortgage payment, minimize late fees or at least create a situation whereby you can afford to stay in your home should you choose to do so.

Loan modification companies assess borrowers’ ability to pay through analysis of wage statements, investment accounts, bank accounts and tax returns, among other data. They then make proposals to the lending institutions for restructuring of mortgage terms in a fashion that will enhance the likelihood of repayment.

Loan modification companies can be engaged by borrowers to negotiate on their behalf. They also can be hired by lenders to help salvage troubled loans. A given loan modification company may rely primarily on one or the other sources of clients, or both.

Lenders have an interest in offering concessions to troubled borrowers because the costs of foreclosure are high. Among other things, borrowers do not want to take possession of illiquid real estate, especially in falling markets.
Loan modification companies’ fees may be billed either to the borrower or to the lender. If the company is engaged by the borrower, the borrower may be assessed the fee, sometimes up front and without guarantees of results. In other cases, even if the borrower engages the company’s services, the lender may be charged the fee, in the case of a successful renegotiation.

A loan modification agreement represents a major restructuring of a loan’s terms and conditions, in a case where the borrower faces long-term problems in being able to repay the original loan. A loan forbearance agreement, by contrast, grants a temporary suspension or modification of payments on a loan, to help the borrower weather temporary financial difficulties.

As long as the mortgage market remains distressed, with significant numbers of borrowers unable to meet their obligations, loan modification companies will have a steady stream of business. On the other hand, lenders who currently outsource this work to independent loan modification companies will have incentives to bring these activities in-house if the crisis proves long-lived. In either case, employment opportunities in the field will be directly proportional to the prevalence of distressed loans.

The employees of loan modification companies who engage in restructuring and renegotiating loans have a similar skill set to that of loan officers at banks and other lending institutions. Accordingly, work at loan modification companies is a viable alternative for present or former loan officers, including those who recently have been laid off.

By: Peter Collins

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