Financing in 92028>Question Details

Fallbrook Re…, Both Buyer and Seller in 92028

Is it better to use a lawyer when doing a loan mod or do it on your own?

Asked by Fallbrook Refugee, 92028 Thu Jun 23, 2011

I have been talking to a lawyer about doing a loan modification. The paperwork and application packet is exactly the same as the one provided to me by my lender (CalFHA). Is it worth $3500 to have an expert help me or should I do the paperwork on my own and save the money?

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Start with the fact that very, very few loan modifications have really been completed...with or without an attorney. When I first relocated to San Diego in Dec., 09 I went to work at what I thought was an ethical company who was doing "attorney based" modifications. My job was to counsel the consumer, gather the paperwork and compile the entire package for the attorney to negotiate with the lender. Given my extensive background it was a pretty easy task...except none of the modifications ever came to fluition...I left as soon as I realized there was no percentage for the consumer in paying for services that they can do just as well themselves.

Save your money, try to work with your lender...but do not do the trial mod payments because all of the principal and interest owed will become due and payable the day they decline the modification. Seriously consider a short sale if you, like most, are not successful with getting the bank to work with you.

Do I sound cynical? Absolutely...the entire loan modification program has been a serious waste of tax payer money and the banks are under no obligation to work with any consumer. Wish you the best of luck on your situation.
1 vote Thank Flag Link Fri Jun 24, 2011
If you are just modifying your loan with your existing lender to reduce the rate, my experience is that there can be very little paperwork involved. Of course, you probably need to have a perfect payment history so the bank has no need to go through the application process again - they usually just charge a fee to do the paperwork on their end. I modified my own home mortgage and it was a nothing - just had to pay something to the bank and they did all the work.
1 vote Thank Flag Link Fri Jun 24, 2011
HI, Your observations are correct with Fallbrooks' out of the way location creating distance t ime travle expenses as well as wear and tear on your family and vehicles, I sold a big beautiful REO from BOA in Fallbrook and it was an absolute steal for my 1st time buyers who were tenants in Rancho Bernardo . Its seems when the gas prices increase FALLBROOK market values decrease. I just had an open house in Lake Rancho Viejo last weekend! I ve been listing and selling short sales for over 35 years since b4 they became a household name. You have more options. Call me or email me to chat if U like. 760 622 6855 Maureen
Web Reference: http://coastal.biz
0 votes Thank Flag Link Mon Aug 29, 2011
If you do not have a CalHFA 1st mortgage, and only took their down payment assistance, then that would be true once you pay off their 2nd then you would be bound to the terms of the 1st non-CalHFA mortgage (which most do not require you to live in the home longer than the first year of the mortgage). But if it's a CalHFA 1st then it's different, those links I posted are the guidelines for CalHFA's 1st mortgages, check out the section called "Occupancy".

I was just joking about Fallbrook, it'd be tough to live there if you needed to be in SD or OC every day.
0 votes Thank Flag Link Fri Jun 24, 2011
I will cross that bridge when I come to it. I have always been of the understanding that after my interest only portion of the loan is over, my silent second was only good until the home ceased to be my primary residence at which point the silent second had to be paid in full plus interest and then I would be free to do what I wish with the property as long as I continue to make payments. Is that not true? I guess I could pay off the silent second and refinance with someone else.
FYI - It is fine and good to get married in Fallbrook and even parts of Fallbrook are really cool and rural (if you like living near chickens and roosters - which I do not) but living here is extremely inconvinient for my husband who owns a security business. It is a real pain to get anywhere from here. Living here adds another 30-40 minutes to his commute into San Diego each way. The cost of gasoline and loss of valuable family time is killing him.
0 votes Thank Flag Link Fri Jun 24, 2011
Do you realize that with CalHFA the property must be owner-occupied for the term of the loan or until the property is sold? So unless part of the modification you are looking for is for CalHFA to let you out from under that clause, you'd just be going to help yourself out only to remain living in this exact home in Fallbrook (what is wrong with Fallbrook? That is where I got married.)

http://www.calhfa.ca.gov/homeownership/programs/30fha.pdf - CalHFA FHA
http://www.calhfa.ca.gov/homeownership/programs/cal30.pdf - CalHFA Conventional
0 votes Thank Flag Link Fri Jun 24, 2011
Wow! I read the thread and it sounds like trying for the mod in any respect would be an enormous headache with no reward. I have contacted a very good friend who specializes in distressed properties. Although we are not in "distress", I think she will offer some good advice.
I am so glad you lead me to that thread. I am definitely reconsidering my approach. It looks like we will have to continue to lose money. It makes me sick to my stomach when I think about how much this "investment" is ruining our financial future. I feel like my dreams for my family have been crushed.
0 votes Thank Flag Link Fri Jun 24, 2011
I found this thread called "CalHFA and a Pound of Flesh" - doesn't sound very promising:
http://www.loansafe.org/forum/foreclosure-laws/27054-calhfa-…

"CalHFA story", their book isn't closed yet:
http://www.loansafe.org/forum/deed-lieu-foreclosure-do-you-n…
0 votes Thank Flag Link Fri Jun 24, 2011
Speak with a non-profit counseling agency, or many of them: http://portal.hud.gov/hudportal/HUD?src=/i_want_to/talk_to_a…

http://ag.ca.gov/loanmod/index.php - tips to keep in mind when trying for a loan modification, including a list of who the AG has sued for illegally providing modification services.

Read about others who have gone through loan modifications - http://www.loansafe.org/forum/ (disclaimer, this website is hosted by a law firm here in California who does loan modifications, but the information & success stories shared among thousands of consumers is still very useful)

There is even a success story I wrote about a client who used the information off of that website to modify their mortgage without even having to go late: http://activerain.com/blogsview/877876/you-don-t-have-to-be-… - I do not do loan modifications but I will say I prefer a do-it-yourself approach to most things.

I think with that information you should be able to quickly ascertain if any advice you are getting from law firms who help with loan modifications is valuable or not, rather than taking a chance on $3,500 that this attorney is *the* attorney for the job - who knows, perhaps they are.
0 votes Thank Flag Link Fri Jun 24, 2011
Ok... let me throw another monkey wrench in here. Technically, we can afford our payments (we are self employed so some months are easier than others) and we have respectable savings. We are seriously underwater (by 200k) and really need to move. We thought we could get our payment down to a reasonable number, save some money for a decent downpayment on another home and rent this one out. I think we need some counciling from someone who does not stand to benefit finacially from the decision we make. I tend to think that loan mod proves that you cannot afford your home. I don't think it would be smart for us to do that considering that we plan on buying our next home within 2 years for approximately the same price. Is that a correct assumption? I am scared to make another mistake with this home.
0 votes Thank Flag Link Fri Jun 24, 2011
That is something you will have to decide yourself. Keep in mind it is very time consuming, frustrating and tedious. Realtors, when trying to do short sales, find the banks to be disorganized, and their workers uneducated as to the process. They lose paperwork, they are very, very slow, and often one hand doesn't know what theother hand is doing.

Also, the banks do not want to modify your loan, they are receiving bailout money to short sell or foreclose but nothing whatsoever from the government to modify the loan so they are gong to deny the loan mod if they can and collect the money. Sometimes the very fact that a lawyer has been retained can help. But that isn't all that helps, it also helps, if you start the process on your own and it goes badly, to write to your representatives in congress and complain. The thing is this, do you know all your rights under the law? Do you know the penalties if the bank fails to comply with the law?

$3500 is a lot of money. Is the attorney giving you any sort of guarantee? What if he can't get the loan modified? It's a tough call and I don't know as anyone here can help you make the decision. You will just have to weigh the cost versus the benefits and choose.
0 votes Thank Flag Link Fri Jun 24, 2011
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