They’re tacking on the missed payments to the mortgage amount and extending the term by 1 year and they’re also offering you a lower rate.

Are you going to take it?

It states

Funds Needed to Advance escrow,
Lawyers fees, ECT. Also My Mortgage is going from $89000 to $94,000
Also It came with pay coupons starting On October 1st. It becomes effective 8/1/2010 But I have until 8/13/2010 To accept. Also September payment is included in the $6523.15 amount. My Interest is going from 6.87 to 5.3 One More thing they tacked on 1 more yr to my 30yr mortgage

Thanks for stopping by NAMF. An Alt Loan Mod sounds like something different compared with a standard loan modification.

In terms of wanting cash up front, maybe when you sent in your paperwork you showed a lot of cash on hand.

Without seeing any paperwork, I’d guess this sounds more like a forebearance instead of a loan modification.

Maybe the upfront cash represents the back payments plus interest and penalties.

Read the paperwork carefully. The answer will be in there. If you are still unsure, google your state’s bar association and find out if there is free legal aid available in your state and county so you can receive a legal opinion.

You can also find a free HUD-Approved Housing Counseling Agency here

http://portal.hud.gov/portal/page/portal/HUD/i_want_to/talk_to_a_housing_counselor

look for agencies that offer DEFAULT counseling. They will help you understand your paperwork for free.

It is justifiable to charge, but obvisouly it is not ethical. It is justifiable because the LO, or “mortgage planner”, is offering their professional services to help in the re-mod process. In plain english, the LO is their to “speed” things up with the Lender. It might be frivolous assistance but justifiable if the client wants the help and is aware that they are paying for something they can get done for free but at a much slower pace. Even if I do not agree with the LO’s rediculous high fee, it comes back to the consumer not wanting to wait to do the re-modification of the mortgage. I wish the clients got better advice, and I wish the LO’s gave better advice. I am built on referrals and do a great ethical job because I like to sleep at night, but I also want to know in the end I helped someone. The LO’s doing this are only helping themselves to a paycheck unearned. They will get weeded out like the rest as we slowly build toward a better regulated industry. Thanks for the solid article Jillayne! John

But its bad to even think about heading that direction. So what’s next. Well I am sure you know now that since writing your blog topic that more and more programs are becoming available.
Now we have legal loan mods for mortgage brokers called the Fannie Mae DU Refi Plus or the Freddie Mac Relief Refinance. Where at least this is a legal way of helping out the client there are still big draw backs for the originator.

For example: Freddie Mae Relief refinance allows up to 105% LTV for the first mortgage, now you have to get the second mortgage to subordinate to the new first mortgage. I have yet to see anyone get that subordination approved with a CLTV over 110% of the value of the home.
In addition the fee allowed for this service is only $2500 and that has to cover all of the closing cost. Whatever is left then the loan originator can claim that as Loan Fees. So considering that you have to pay title, Escrow, Appraisal, Credit, 4506-T processing, Impounds and recording fees – I can only see about $500 – $600 left for a loan fee. Is that enough? I guess if that is all you did is those type of loans and you could get all of them approved but that is tough in this market.
But it at least covers the fiduciary duties of the loan officer. You can do that in the loan mod business.

93% chance of getting your loan mod approved? I saw you write that but that doesn’t make any sense to me. How about a 7% chance that it will actually happen. That is more like it. Even the numbers put out by Hope Now don’t even show that much of an approval rate.

You also talked about the re-default rate. I think that the latest estimates are more like 50% but that really is not a good batch to review from because those early modifications were done without proper verifications.

Now with Mod in a Box by the Fed you have to show proof that you can make the payments. That will really trim down the re-default rates. Obama’s plan is to allow modifications but only if they truly qualify. Now hopefully more servicers will actually run the numbers. Instead of just printing the Modification Docs.

But back to your point. No loan modification referrals are not acceptable for a Fee for Service. The loan originator has a fiduciary responsibility and the obligation to work on behalf of the client. To preform a service that will actually work for the client. Loan originators only get paid when the loan the client picks out results in a successful funding of that loan.

What the servicing business needs is a better way to present that message to their clients so they don’t have to seek out other methods to get help with their loan.
Check out this new service for loan servicers and government non-profits:
http://www.mortgageworkoutcenter.com

With the idea that the government is coming out, “if you pay-walk away” Then the idea of free market/capitalism is destroyed. With billion of dollars are being granted to these housing counseling, incentive going to the mortgage servicer/lender from the government. Where you think they get that money from???? Is it really free???
http://www.hopenow.com <== sponsored by the government. Of course it’s free. They are group of people who are hired by government to do your work with your tax dollars.
To have your loan mod done or anytime of products you want to buy for less that what it worth, you need to be aggressive with a negotiating skills. Not everyone has such a skill or can acquire it overnight.
To me, there is no such thing as free service. You either pay it or you go get it from the government which in turn tax you, your kids, your grandkids, your great grand kids and giving up your rights, your freedom, your free market where service is provided and a fee must be paid.

Troubled borrowers can now apply for help from their mortgage servicer by submitting details about their financial situation at HopeNow.com, the Web site operated by the alliance of mortgage servicers and nonprofit counselors.

The online application form supplements the existing HOPE NOW hotline, (888) 995-4673, and servicers are promising to respond to applications within five to seven business days to confirm the process has begun.”

Here’s the Hope Now website:

http://www.hopenow.com/

Once again, a FREE process for homeowners.