The Truth About Mortgage Loan Modifications Finally Leaks Out: What the NY Times Reveals about Garbage  Fees and Principal Reductions

July 13, 2008, the NY Times finally revealed what my subscribers have known for months.

 

That loan modifications are often done to help the lender not the borrower.

The article reveals some important details that the bankers would rather you didn't know:

 

A vast majority of modifications industrywide offer a temporary and modest interest rate reduction, accompanied by an increase in the overall principal owed because of added — and what critics contend are often bogus — fees larded onto the loan in the delinquency period.

 

 

Exactly. It's a matter of kicking you when you are down. Yes, the lenders didn't put you in this position but they certainly helped. As I have detailed in a previous video on how the banking industry creates money from thin air and keeps you perpetually in debt,  all they want is for you to keep paying.

As long as your mortgage loan is performing in some manner, they can put off doing anything substantive to help you.

The article continues:

In California, an epicenter of the mortgage crisis, only 1.3 percent of loan modifications struck between January and May this year involved a reduction of principal, according to the state’s Department of Corporations. A total of 356 of 21,359 loan modifications in the month that ended May 17 involved a cut in the principal balance, it said.

 

 

 

Remember, I spilled the beans on this months ago in another NY Times article. People are quietly getting principal reductions. Very few but some are getting them.

 

Now the article goes on:

 

“Fees are one of my biggest issues with loan modifications,” Mr. Bedard says. “Say you owe $32,000 in arrears that the lender is going to put on the back of the loan with a 6 percent rate. Nobody questions what the $32,000 is and lenders do not substantiate these fees.”

 

 

Well, they darned well should substantiate their fees. When you get a loan, it is made by a bank or broker who then sells the loan off to a "noteholder."

The people we call "lenders" are really hired hands who are merely "servicing" the loan. They enter some stuff into their loan servicing application. Then that application spits out numbers and letters. The stuff that was entered in may be bogus. And there is a great expression "garbage in garbage out" that relates to these computer applications.

The article continues:

 

“It’s the Wild West again with these loan mods,” Mr. Bedard says. “A lot of people are getting mods that are unaffordable.”

 

And it gets quite interesting here:

 

When presented with these findings [the bogus fees and unsubstantiated charges and ripoff rates and legal violations], Mr. Bedard said, most lenders and servicers quickly agree to a loan modification. Many of the deals that his firm has arranged have initial interest rates in the 3 percent range.

 

The article then discusses briefly one of the most powerful tool in the consumer's arsenal, the Qualified Written Request, made under RESPA  Section 6 and all covered by 12 U.S.C. 2605(e)

“Magically, when we do that, we will get an offer of a modification and those fees often go away,” Mr. Bedard says.

 

So that's part of the whole story — that you haven't heard before except perhaps if you are a subscriber. Please make sure you become a subscriber if you aren't already.

And please comment on your situation or whatever you think about this article, or making money helping others do loan modifications. Remember that I am not a lawyer. You should really listen to someone who is not like me, Some Guy on the Internet. I can't be held responsible for what you do or don't do.

The HUD page mentioned in the video is at http://www.hud.gov/offices/hsg/sfh/res/reslettr.cfm

Thanks and talk soon

 

 

P.S. I'm coming out with a new debt relief module for my Mortgage Relief Formula. It's an unannounced bonus and I'll be including it for people who try it out right now.

Click here if you want to check out my Mortgage Relief Formula material

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