A majority of mortgage loans are serviced by loan service companies. Loan servicers in charge of loan modifications are separate companies from your bank. A loan modification may cost the servicer more upfront fees because they have to pay more staff to handle the requests and process the applications. It’s cheaper for a loan servicer to let your home go to foreclosure because they can charge the bank more money in foreclosure fees. Loan servicers don’t always have the bank’s best interests in mind when it comes to making money. They are not as motivated as your bank may be to give you a modification. They tend to hold up the process or find reasons to deny your application.
Another explanation why it takes so long to get a modification even if you are working directly with your bank's loss mitigation department is that most banks are short staffed and cannot handle their volume of modification requests. They would like to help you, but they just cannot get to you quickly. Unfortunately, if your bank has already instituted foreclosure proceedings, they may foreclose before your modification gets approved. A modification takes at least 60-90 days or longer to get approved.
Works Both Ways
Loan servicers and banks have recently complained that they are having trouble getting homeowners to cooperate by submitting all the required financial documentation and completing their applications. Many applications are being delayed or denied as a result. It’s a good idea to hire a modification attorney who is experienced at negotiating modifications to avoid this problem. With a modification attorney handling your case, you know the right paperwork is being submitted to your bank.
Conditions are Improving
Banks and loan servicers are finally getting more organized because they have had the opportunity the last few years to work out the bugs in their loan modification programs to see what works and what does not. In the beginning, many modifications were not working very well and borrowers were defaulting again in six months. Now that the government has put pressure on banks and loan servicers and has offered them programs, guidelines and financial incentives to approve modifications and streamline the process, loan modification approvals should start to move along quicker. Banks still have tight guidelines to follow to make sure you can afford your new modification payments. So you must have steady income and be able to prove your financial hardship.
A large number of borrowers are realizing the importance of getting professional help by hiring a modification attorney or modification company who knows what they are doing and who has had good success negotiating loan modifications. You only get one shot at obtaining a modification so it’s foolish to jeopardize losing your home because you don’t want to spend the extra money to save it.
Hire an Attorney
A modification attorney knows how to get a modification approved. The attorney has established relationships with most banks. Banks are apt to take your application more serious and be more cooperative if they know you are represented by an attorney.
