Jim Murphy, a Phoenix-based real estate attorney with Carmichael & Powell PC, spoke at our office meeting this morning. He discussed a number of issues including loan modification. I thought I’d pass on some of his wisdom, as well as our thoughts on the subject.
Let’s say you find yourself unable to pay your current mortgage payment. Maybe the interest rate went up, your employer cut your hours… something changed. One of your options is to seek a loan modification from your lender.
Simply stated, a loan modification is exactly what it sounds like.. a modification to the terms of your loan.
- Your lender may agree to extend the payment period and re-amortize the loan.
- The lender can lower the interest rate.
- The lender may tack any amounts in arrears to the principle balance and re-amortize the loan.
- Sometimes, not often, lenders reduce the actual loan amount.
In other words, you and the lender try to find a way to make the payments affordable and keep you from defaulting on the loan.
How do you proceed with a loan modification? There are a few ways:
Do It Yourself: A web site, http://www.hopenow.com/, has been launched with lots of information to aid the DIY person. At HopeNow you can you can find the loss mitigation department website for several mortgage lenders. We tried out the one for MetLife Home Loans and found it to be straight-forward and easy to follow. A few things to know:
- They will ask you to provide a variety of paper work. Use a check list to make sure you have everything they require. One missing document can stop or end the process.
- Put your loan number on top of every piece of paper you mail or fax. The loan mitigation people have mountains of paperwork on their desks and this will help them keep your file together.
- The process takes several weeks. Probably two weeks before you’ll hear from anyone and another four to six weeks to get a final answer. Try to be patient.
- It is always recommended you consult with an attorney prior to signing, mailing or faxing any legal documents.
Hire An Attorney: There are attorneys who specialize in loan modification. A good person will know the ropes, what documents you need to provide and how to move through the bank’s obstacle course. Naturally, there is a fee for this work.
If you want a referral to a qualified professional in Arizona, Jim Murphy with Carmichael & Powell will be happy to help you. Just give him a call at 602-861-0777. You can also try the Maricopa County Lawyer Referral Program at 602-257-4434.
Loan Modification Company: Loan Modification Companies are popping up all over the place. You see them on TV and on the internet. Some are good companies trying to help. However, several are known or believed to be pure scams. All we can say is be careful. If they are charging large, non-refundable fees, you can probably do better. If they have a reasonable processing fee for putting together the initial package and a secondary fee if they are successful, you may be in good hands.
IMPORTANT: If you find yourself in mortgage trouble or know it's just around the corner, the best thing you can do is take action. You may be surprised at how helpful some of the banks are in this economy. Many are finally well staffed and know what to do... a big difference from this past Fall. We strongly advise you to consult with an attorney prior to signing any agreements... it's just the prudent thing to do.
We hope this info has been helpful. If we can answer any questions, know we are just a phone call or email away.
Gene Urban & Ron Urban
The Urban Team at Realty Executives
gene@UrbanTeamAZ.com
602-234-5777
This information is not provided as legal advice to the readers of Urban Life, their friends or Spot the dog should he be in jeopardy of losing his dog house. Legal advice comes from a qualified, licensed attorney.
