LawsonGroupMediation

There are almost daily press releases concerning different lenders who are making it easier for borrowers to submit requests for a loan modification. The lenders do not want other entities, including lawyers and Realtors processing loan modifications.

It is true that if the modification only requires a reduced interest rate or term of the loan, the lender is the best entity to process the loan mod. As Realtors and attorneys, we should not charge someone for a competent service that would otherwise be free. There are many vultures who prey on borrowers to provide services that they can receive free.

However, it is also a reality that in the past 85% of loan mods were rejected. With the recent changes, that percentage has dropped to about 65% last I heard. So despite all these press releases about making it easier to modify a loan, these entities are really be quite deceptive.

The cases where an attorney or Realtor assists borrowers with loan modification are when the principal balance of the loan needs to be reduced to match the current market value that is now lower. The professional is needed to make certain that the correct market value of the property is obtained. We are all too familiar with how appraisals may be all over the board. We need to keep appraisals accurate for the benefit of the borrowers.

However, there is a more important reason Realtors and attorneys should process loan modifications. During the years from 2001 to 2007, approximately 80% of all ARM loans contained TILA or RESPA violations. With the high percentage of rejections of loan mod proposals, if there is a violation, that violation is leverage to encourage the lender to approve the proposal. While ARM loans are the most egregious in violations, other loans contain lesser percentages of violations.

In contrast to short sales where normally it is the secondary market investor and/or MI carrier who must approve the proposal, in loan modifications it is typically the servicing lender with this authority. We all realize that we cannot blindly trust the lenders to protect the interests of borrowers, so loan modifications are a great opportunity for Realtors to market for and process. The beauty of it is that if the proposal is rejected, you then can sell it in a short sale. You get 2 fees.

Real estate agents can process proposals themselves, or you could use a firm like ours to process and deal with the banks.

Our publications were written to help you understand the process and handle everything from marketing for loan modifications and short sales, to drafting the proposal, to performing a legal and marketing analysys, to negotiating with the lenders. …and, it is very low cost.

You can purchase the book at www.LawsonGroupMediation.com or at Amazon.com (search books for “short sales” or “loan modification”)

Best wishes to all,

Ken Lawson JD