Loan Modifications: Are Lenders Really Helping?
If you are having trouble getting your current mortgage modified, it may have more to do with the lender’s desire to collect the very high fees they charge for delinquent loans than on the lender’s limited staff capabilities as the Federal government has alluded to. The Tresury department has expressed that mortgage companies are not hiring people quickly enough to meet the current volume of customers seeking modification. I have had numerous customers share with me their frustations and difficulties in trying to get someone at their lender and/or servicing company to assist them with answering questions, let alone getting their loan modified. In the meantime, delinquency fees continue to accrue on their loans putting them further behind.
Another issue is those who are pro-active and are trying to avoid becoming delinquent due to job loss, death of a spouse or divorce, are often told that they must become delinquent before any modification option is available to them. One late mortgage payment can drop an individual’s credit score up to 100 points. Since credit scoring drives many factors in an individual’s life beyond the issuing of credit, such as employment opportunities or rates offered on insurance, it is ridiculous that lenders want to ‘recommend’ to individuals to become 90-days delinquent on their mortgage before seeking modification assistance. Yet that is exactly what has been told to several people I know who later called me seeking some kind of solution to their situation. Unfortunately, loan modification can only be offered by an individual’s current mortgage company. In most cases, due to depressed values, refinancing with a new lender is not an option because the property will not appraise for what is currently owed on the mortgage, further strapping the homeowner.
If a person is in a financial crisis to begin with and is attempting to find a workable solution before the crisis becomes dire, they should be applauded and given every possible resource available. To tell someone that essentially, they will not be offered any help until they’ve allowed their credit rating to be destroyed does not make sense in any way. Oh, and by the way, even after giving a borrower this ‘advice’ to let their mortgage go 90 days delinquent doesn’t guarantee the lender will agree to a modification at that time.