Getting Your Servicer to Modify
Many homeowners had high hopes concerning loan modifications. The premise sounds good– lower your interest rate and your monthly payments, maybe reduce the principal– end up with a mortgage that you can afford, stop pending foreclosure. Unfortunately, it rarely works that way. For starters, mortgage servicers will very rarely write down principal. And you should definitely not rely on the loan modification process to stop a foreclosure, because it rarely will, despite what you may be told on the phone by a processor.
In terms of getting a lower interest rate or lowering your monthly payment–-sometimes a loan modification can accomplish this. Unfortunately the experience of the majority of homeowners trying to obtain a loan modification has been like something out of a bad dream: documents lost and requested over and over; the inability to get anyone on the phone who has any idea of what they are talking about; or the inability to reach anyone at all, despite dozens of messages left. Don’t be fooled into thinking that loan modifications were designed to help you, they were not.
And to make matters more confusing, your servicer may initiate foreclosure proceedings while you are in the middle of trying to work out a sustainable loan modification. Unfortunately, In many cases they are allowed to take this action, and will, despite reassurances to you, the homeowner.
On 11 July 2012 legislation went into effect, in Oregon, that made the process a little more fair for homeowners facing non-judicial foreclosure. SB 1552 mandates that mortgage servicers must act in good faith. And, in certain circumstances, the homeowner has the right to require mediation with a neutral third party that has as its objective a workable alternative for the homeowner. Unfortunately this bill does not apply to judicial foreclosures.
There are a host of non-profit organizations that can help you with the loan modification process if you can’t afford a good attorney. Don’t pay a company or an out-of-state attorney to get you a loan modification. Many of these are rip-off schemes.