is a loan modification a real possibility or another scam?

Asked by Vicki Succi, Ocala, FL Tue May 12, 2009

i know a lot of people who have contacted their lender trying to modify the terms of their loan only to get no where and yet i hear a lot of talk on the TV giving advise to distressed homeowners to get their loan modified
Okay so how's it done? by whom? i see a lot on the internet too and also a lot of advise about how to advoid being scammed It's kind of hard to know what is even Real in this market

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Kellen Gracey, , 33304
Thu May 14, 2009
Hey Vicki,

Loan Modifications are a possibility, but it does rely on income, as opposed to a credit score (like a refi would). Loan Mods are basically a renegotiation of your current terms with your current lender. Depending on which company you choose and how well of a job they do, you could walk away with a much better situation than what you were already in. Alot of times, these modifications are better for someone who is behind on monthly mortgage payments - as a modification could not only bring you current, but force your monthly payment down to something reasonable.

As I'm in the mortgage market, we deal with modifications all the time. If you would like some help with your loan or deciding whether to do a modification or not, feel free to contact me and I'd love to help you out.

Kellen Gracey
Mortgage Professional
BayBurg Financial
(386)237-7231 Cell
(954)764-7064 Office (ext. 214)
1 vote
Alma Sanders, Agent, Panama City, FL
Wed May 13, 2009
The government is providing incentives to lenders to assist the homeowners in order to avoid foreclosure. The lenders are obligated to reduce the mortgage payment to 31% of the homeowners income. What is happening is that the lenders are giving the homeowners the runaraound, because the homeowners do not know the law and the details. That is where the loan modification companies come handy. Now , it is a tricky situation and you have to be sure to be working with a legitimate company. The word out there is : if they want to charge you up front...don't do it. Visit Harris blog on this. It is very informative. Hope this help!...Alma Sanders, ERA Neubauer Real Estate inc.
1 vote
Gerard Carney, Agent, Spring Hill, FL
Wed Jul 27, 2011
Loan modifications are real and do exist and there are guidelines and rules that you need to follow!
0 votes
Paula Kroll, Agent, Cape San Blas, FL
Wed Jul 27, 2011
I am a real estate professional, but I will answer your question from the perspective of someone who has been through the "modification hell" process. Without retelling my story, banks have no incentives whatsoever to do these. The government bailed them out unconditionally. Participation in Making Homes Affordable is strictly voluntary. They do receive incentives from going through the motions of processing your application. In my case, it took over a year and 8 or 9 applications and resubmitting of documents to finally be denied. We were considered to have no hardship even though we were well above the 31% debt/income ratio. We appealed twice and now have opted out.
If you decide to pursue a loan mod, be prepared to document every phone call, with names, titles, dates, subject of conversation. Also, follow up at least twice weekly. Be prepared for them to ask for all documents over and over again. What happens to them is a mystery to all, even the banks. But they seem to be quite cavalier about losing your sensitive, confidential information. That is very scary, indeed. Our loan servicer denied us because the only hardships they recognize are death, divorce, or loss of employment.
If you have followed the media, the number of successful modifications is around 10% of all applicants. Dismal.
0 votes
Abrir Gonzal…, Other Pro, Los Angeles, CA
Fri Jun 24, 2011
Hi Vicki

Loan modifications are certainly real. They do depend on your income and your monthly expenses and debt. Good Luck.
0 votes
Alma Kee, Agent, Tampa, FL
Mon May 24, 2010
Dear Vicki,

Good answers by Alma and Vicki.

Also if you truly have a hardship where your monthly costs ( (principal + Interest + mortgage insurance + property taxes+ Homeowners Assoc or condo fees) are above 31% of your Gross income, then you may be able to qualify for a loan modification.

The company you make your mortgage payment to is not likely to actually own the mortgage, they are merely a middleman "servicer" who is collecting the payment for the "investor". Find out who the actual investor is on your mortgage by calling your "servicer". You can also do an online lookup to see if it is owned by a GSE, Fannie Mae or Freddie Mac.

If you're qualified then make sure to send a letter via "certified" mail to your "servicer" so they can't say they didn't receive your application for a loan modification. Check online first with your servicer and send all of the paperwork required by your servicer. Then call your servicer.

The US Treasury Dept is putting a magnifying glass on servicers right now and tracking their record of modifications so now may be a good time to actually get it done!

Hope this helps.
0 votes
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