It's safe to say that most people attempting to do their own loan modification are novices
Glendale, CA (PRWEB) March 12, 2009
These days millions of homeowners are looking into renegotiating their home loans, and many are choosing to do so on their own.
But going down this path can be difficult, warns Steve Aranda, author of The Complete Guide To Loan Modificaton. Banks have their own best interests at heart - not the consumers - which makes it difficult for homeowners to get a fair deal if they're not armed with all of the facts.
That's why Aranda, a loan modification expert, released his new guide, geared towards educating consumers on how to negotiate their own home loan modification.
Here are five things that banks don't want homeowners to know as they navigate these potentially rough waters:
1) They don't want you to know what a good offer is.
The White House's new Making Home Affordable plan does attempt to set some standards. Nonetheless, it's still difficult to gauge if you're getting a fair offer - if and when your bank finally puts something in writing.
"It's safe to say that most people attempting to do their own loan modification are novices," says Aranda. "Let's face it, most people own only one home, and haven't had a lot of opportunity to hone their skills at modification. Your bank knows this. They rely on it."
According to Aranda, a good modification should always include a long-term reduction in interest rate - a term of at least 30 years - and, when possible, a principal reduction.
The bank will almost always offer homeowners as little as possible to begin with and see if the homeowner accepts their offer. If they do, then the bank has done their job. Websites, and consumer advocate groups like http://www.loanmodificationclub.com, supply homeowners with up-to-the-minute forums to see what people have been able to negotiate. In this way, homeowners can know if they're truly being offered a reasonable deal, or if the bank is just playing them.
2) Many fees are bogus.
When a homeowner looks at the amount a lender claims that they owe, they are often surprised at how large that number is. If they missed four payments of $1,000 each, why don't they owe $4,000? The answer is late fees and penalties. The problem is that all of these types of fees have to be justifiable, and completely spelled out. Because of the sheer magnitude of the volume of loan modification requests that banks are getting today, most don't take the time to document properly what they're attempting to collect from homeowners. By filing the correct paperwork, you can guarantee that if those fees were indeed "bogus," the bank will drop them every time.
3) Most loans have RESPA violations.
Depending on the type of loan a homeowner has, up to 70% of the ones out there just like it have RESPA violations. This means that the Real Estate Standards and Procedures Act (RESPA) was violated when your loan was originated. This gives homeowners recourse up to and including the hypothetical invalidation of the loan itself. To find out if your loan contains any of these types of violations, you can order a forensic review of your original loan documents. These can typically be purchased for between $895-$1,500 from a credible company. Members of Aranda's web-based community at http://www.loanmodificationclub.com have access to these types of reports at a discounted rate.
4) Banks don't want homeowners to know what a qualified written request under Section 6 of RESPA is.
Although it's common for banks to exhibit what appear to be negligence and/or incompetence when it comes to handling a homeowner's request for a modification, there's a way to hold their feet to the fire. By sending a qualified written request under Section 6 of RESPA, homeowners force the banks to respond (and to address these issues within 60 days). With the clock ticking, homeowners move to the front of the very, very long line of other novices who are hoping to work their loan problems out.
5) Principal reductions are possible.
Yes, it's true that principal reductions are the most difficult thing to achieve when negotiating a loan modification. Some banks, however, would have homeowners believe that they simply aren't possible; and that just isn't true. In fact, one of Aranda's associates recently negotiated a huge principal reduction on behalf of one of his clients.
"It's a fact that any time we've seen a principal reduction for a client, the bank involved originally turned down the proposal," states Aranda. "The ability to achieve your financial goals is within reach. You just need to be properly equipped before you enter the fight."
For more detailed information on these and other key steps that homeowners need to follow in order to modify their owns loan successfully, you can log onto http://www.loanmodificationclub.com, a members-only website that provides all the tools needed to modify their own loan, as well as referrals to qualified, credible sources with proven track records for those who seek professional assistance.
Steve Aranda is the author of "The Complete Guide to Loan Modification," and editor-in-chief of http://www.loanmodificationclub.com and http://www.homerescueclub.com. His books and online communities are committed to helping homeowners succeed at staying in their homes through the negotiation of a loan modification.
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