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Are Loan Modification Success Stories Increasing or Decreasing?

At Loan Modification Advocates, we have seen a steady increase in our ability to push loan modifications through to success.  The Treasury Department recently came out with statistics that showed more than 299,000 homeowners received permanent loan modifications as of last month. That equates to around 25% of the 1.2 million homeowners who started the program since March 2009.  Without further information, one can perceive this news as either positive or negative.

From our experience, this number is just too low, and the time it takes to complete a loan modification is still shocking.  Clearly, there is not enough being done by the lenders to expedite the process of loan modifications. However, at Loan Modification Advocates, we are doing everything in our power to put you, the homeowner, in the best particular situation to obtain a loan modification.

When you become a client of Loan Modification Advocates, we perform a detailed analysis on your particular situation.  Our goal is to determine your likelihood of obtaining a loan modification based on our experience with past clients and our knowledge of the guidelines established by the lenders for determining whether a homeowner “qualifies” for a loan modification. Before turning in your file, we work with you to execute a strategy that maximizes the completeness of your file.  Once we believe your file is in the best shape possible, the file is turned in. One would assume that submitting a well-analyzed and guideline-specific file would result in a fast and efficient turnaround by the lender.  Unfortunately, in some situations that is not the case.

Here are some of the scenarios that we battle everyday:

• The lender receives the package and incorrectly enters the information into their system. This most typically occurs with the income portion of the file.  For example, some analysts do not understand how to read the income from self-employed homeowners.  The incorrect input results in a rejection by the system.
• The file is sent in and goes immediately into a stack of files.  Time passes and all the information becomes stale.  Once the file is picked up to process, all new updating is needed.
• The lender changes their criteria/policies mid-stream in the process and does not let the homeowner or third parties know of the changes.  This results in a further delay in the process.

In the lender’s defense, the problems do not only exist with the banks.  Homeowners also have contributed to the number of homeowners dropping out of the Obama administration’s main mortgage assistance plan.  In order to complete the program, borrowers must make at least three trial payments on time. In many cases, homeowners are delinquent with their payment or do not pay the full modified amount – both result in being let go from the program. The Treasury Department also reports that about 277,000 homeowners, or 23 percent of those enrolled, have dropped out during this trial phase. 

Another problem is that, initially, borrowers were able to state their income verbally and then provide proof of their income later. This delay in providing a complete set of documents at the beginning of the process resulted in a bottle neck in the system.  This gives credence to why we at Loan Modification Advocates take steps to fully prepare the file before submittal.

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