Loan Modifications, 3 Nightmare Stories You Don’t Want To Copy

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Loan modifications are such a complicated but vital tool for homeowners in trouble we cannot afford to play ignorant. The trouble is that for many people to do research in home loan modifications or refinance is so overwhelming they prefer paying a complete stranger to do it. This is not necessarily a bad idea if you choose the right person or company but that is a difficult task in itself.

Scaring people into doing something is not necessarily the best way forward but hey it worked for the Inquisition so we are going to have a shot at it. The following stories are of real people like me and you that went through hard times and could not or did not deal with things the right way.

Loan Modification Nightmare 1. Signature Required.
Lost paperwork when you are trying to modify your loan and in desperate need for lower monthly payments is a nightmare. When it happens 9 times it is beyond the joke. This was the case of one borrower in Florida. Washington Mutual lost their paperwork 9 times during their loan modification process.

Fortunately for them they were savvy borrowers and sent all the paperwork signature required so there was no question who had lost the paperwork or not sent it. The process ended up lasting 1 year with endless hour long screaming sessions over the phone. The advice from the Bank was not always of the highest caliber. On one occasion they advised the couple to stop making payments because the bank could not help until the couple was 2 or 3 months behind in payments

The worst thing is that banks are actually paid by the government to manage loan modifications. The lesson from this nightmare is that you should always keep copies of paperwork and send “signature required”.

Loan Modification Nightmare 2. Get behind in your payments.

One of the nightmares of losing your job is the insecurity that goes with it. A loan modification that reduces your monthly payments to a manageable level seems just what the doctor ordered. The problem is when banks or loan modification consultants ask you to get behind in your payments before they can help you. Getting behind in your mortgage payments will make a delinquent borrower and destroy your credit rating.

Loan Modification Nightmare 3. Banks that ONLY want to help themselves.

In some scenarios banks can actually benefit from a foreclosure. The costs associated with short selling the home and the added fees you are charged could actually be profitable for a bank. Another similar nightmare is when banks only allow you to apply for certain loan modifications. Wells and Fargo for example have been reported to only offer three options to borrowers in trouble, a short sale, a quick deed or a loan modification with delinquent repayment even if the borrower is not behind in his payments.