Community Outreach Event

A Loan Modification Agreement is a mutual agreement to change some aspect of a contract or mortgage including loan terms or loan balance permanently. It allows the loan to be reinstated, and results in a payment the mortgagor can afford. This can only be accomplished through the bank who issued the loan.

The truth is that many modifications actually never come to fruition – the process can be frustrating and difficult to navigate – it is best to approach it anticipating that this process will be time consuming and cumbersome to complete. Paperwork can be submitted and subsequently misplaced, or there is no record of it on file once the homeowner calls the bank to follow-up. Some homeowners have gotten conditional modifications making temporary modification, and ultimately still lose their homes. A loan modification is ideally suitable for someone who makes $100,000, but their income has dropped to $80,000 for example, and they want to stay in their home, but need a lower payment.

If you are pursuing a loan modification be aware that on October 11, 2009, Governor Schwarzenegger signed Senate Bill 94 (Calderon), and the legislation took effect immediately upon his signature. Thus, according to California law it is illegal for any person, including real estate licensees and attorneys, from demanding or collecting an advance fee from a consumer for loan modification on 1 – 4 unit residential dwellings.

Additionally, I outlined below the five tips to avoid being scammed when behind on your payments as this is an ongoing problem that we are seeing with vulnerable home owners – these were issued by the California Department of Real Estate www.dre.ca.gov

5 Tips to Avoid Being ScammedWhen Behind on Your Payments
1. DON’T pay up-front fees. Foreclosure consultants are prohibited by law from collecting money before services are performed
2. DON’T ignore letters from your lender or loan servicer.
Options if you are behind on your mortgage payments…
Responding to those letters is your best bet for saving your house.
3. DON'T transfer title or sell your house to a "foreclosure rescuer." Beware! This is a scam to convince homeowners they can stay in the home as renters and buy their home back later. It might also be part of a fraudulent bankruptcy filing. Either way, a scammer can then evict the victim and take the home.
4. DON'T pay your mortgage payments to anyone other than your lender or loan servicer. Mortgage consultants often keep the money for themselves.
5. NEVER sign any documents without reading them first. Many homeowners think that they are signing documents for a loan modification or for a new loan to pay off the mortgage they are behind on. Later, they discover that they actually transferred ownership of their home to someone who is now trying to evict them.

There are government organizations that can be helpful if you find yourself needing additional information - the U.S. Department of Housing and Urban Development www.HUD.gov, and another organization The Home Ownership Preservation Foundation www.995Hope.org (they can be reached by phone at 888.995.HOPE ) this organization can provide answers and counseling to help homeowners avoid foreclosure. They are an independent non-profit that provide counselors from HUD-approved agencies dedicated to helping homeowners. This assistance is provided free of charge.

There is so much misinformation floating around with regard to this topic, that SJREI is sponsoring a free forum to address the issues – this will include a panel of experts including an attorney, and accountant to address the tax implications involved with short sales and foreclosure, a bank to update us on the foreclosure situation, and finally recommended resources for homeowners . It will be held on August 10th from 6:30-9pm at the Biltmore Hotel in Santa Clara.