Loan Modification Training | How To Do Loan Mods | Loan Mod Secrets | Start A Loan Mod Business
A new HREU Mortgage Loan Modification student just emailed me this question:
“Why would a lender want to do a loan modification vs allowing the property to be sold short….or….having the home go into foreclosure?”
Lets be clear about this…not every homeowners will want to do a loan modification. We estimate that 3 out of 10 sellers will actually go through with the loan modification process. The other thing to consider is the homeowners lender may not allow the borrower to do a loan modification. Remember, the borrower must actually qualify for a loan mod. For those homeowners who don’t want to…or can’t do a loan modification they will need to sell the home via a short sale. (Agent Short Sale Secrets students…you know what to do to help these sellers)
Lets look at this from the lenders perspective…
lenders are on the hook for the value of the loan. If you go through a short sale, they lose money – about a fifth of the value of the loan on average. This is an immediate charge against the company’s book value. For properties that go through foreclosure, the percentage loss is about doubled, in aggregate. Nationally, foreclosures cost lenders $47,000 to $61,000 per property, in addition to the lowered value from being a foreclosure. If they agree to modify your loan, it’s a hit against future income, but it is not a direct hit on the book value of the company, and it turns a non-performing asset into a performing asset as soon as you’ve made a payment or two – much quicker than foreclosure. Finally, it gives them at least a glimmer of hope down the road of recovering all of their money – a very good hope, in my opinion, as the market will recover in time – and keeps them from losing more money than they have to now. It also, not coincidentally, locks you into keeping the loan with them for the forseeable future, because nobody else is going to refinance an upside-down loan.
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When there is a short sale, what happens to that balance left owed? Can the lender go after the seller for the balance? If you don’t know or if this is different in every state, how can I find out? Who do I call or contact to find out?
How do I find the allowable fee for a loan modification in State of Missouri? It is my understanding that the state sets the fee. So far, I have not been succesful in locating information about load mods in my state. Can you help? I just signed up for HREU loan mod home study program, so I need that infor ASAP. Thanks, in advance, I remain sincerely ready to become a successful loan modifier. Darlene
Hi,
You would need to confirm this but, I am pretty sure your state has NO laws about offering mods.
Hope this helps!
Tim
Hi,
Call your State’s Department of Commerce…Division of Real Estate. They will know.
Chances are your state has no requirements.
Tim
The State of New Jersey and a few bogus Loam Mod companies are being shut down and I beleive prosecuted by the Attorney General office and you must be licensed ib NJ to do loan mods. These guys where taking money upfront and basically ripping off homeowners whom are at a low point in their life. Theives!
Hi,
Fewer than 10 states in the nation have any rules/ laws about loan mods.
If you aren’t finding any rules/ laws for RI….then there probably aren’t any.
Call your Division of Real Estate to be sure.
Tim
Here in Columbia SC, a traveling group last week held a load mod “program” to help the public for free. They attracted 20,000 people, many of which camped out overnight just to be sure to be seen. It was on the front page of our local paper The State, and approximately a third did have their loan modified with rates reduced from 9 to 3%, and some excessive interest forgiven. So – how do we compete with these “free” groups and who is backing them? The government? Enjoy your webinars! Verdie
Can you tell me what you get with your course? Thanks, Stan Brooks
Hi,
Expect a call from our office…or you can reach us at 866-422-9497
Tim