Homeowners need to be leery of any “Foreclosure-rescue consultant” that charges upfront mortgage modification fees. According to Florida Statute 501.1377 only a few entities/organizations are legally entitled to collect upfront mortgage modification fees. So, if the homeowner is dealing with someone or entity that IS NOT an attorney, the existing lender, non-profit organization, HUD (Housing and Urban Development) organization they should NOT pay any upfront fee. A professional in the mortgage business, governed by Florida Statute 494 can charge an upfront application fee approximating up to $1,000.00, but they have to defer the mortgage modification fee until they have earned the fee. A mortgage professional has earned their fee when the mortgage holder has agreed to modify the loan (i.e. issued their commitment to modify the mortgage, etc.)

In the final analysis, if you are a mortgage professional in the State of Florida and you legally want to play in the game of mortgage modifications, you need to follow Florida Statute 501.1377 if the homeowner is in a foreclosure situation or Florida Statute 494 if the homeowner is seeking a lower loan payment or loan restructure through a mortgage modification. The reality of it is, once the lender has approved the modification, they typically send the modification documents to the homeowner who executes them before the mortgage professional becomes aware that even had been approved. At that point, the homeowner most likely obtained a satisfactory mortgage modification and has zero motivation to pay any additional fees, regardless the terms of the contract. Of course, the mortgage professional can file a claim and take the homeowner to court but who wants to deal with the time and cost associated with that.

Unfortunately, it appears as though the State of Florida is sending a clear message that they would prefer mortgage professionals stay in the business of originating loans and not working them out. After all, why would the State solicit the help from a group that contributed to the problem in the first place.

Categories: Mortgage Modifications

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If you can make your mortgage payment, obviously, you should continue making your payments and never modify your mortgage loan. However, given the current economic environment within the United States, many homeowners are being dealt financial hardships that are severely impairing their ability to pay their mortgage loans. As a result, homeowners are faced with the stress of deciding whether to let the bank foreclose or engage the services of a licensed professional and modify their mortgage loan.

Again, we always defer to the proper and ethical stance, which, when considering the 2 aforementioned options, mortgage modification is the choice that should be made. Not only does a mortgage modification allow the homeowner to stay in their home, it maintains the integrity of the mortgagor’s relationship with the lender and, in most cases, part of the modification agreement consolidates all the late payments and defers them to the end of the loan, which will bring the credit standing for the borrower to a current status.  Additionally, the costs associated with the foreclosure process and the inconvenience of dealing with all related parties further support mortgage modifications as the most “make sense” option.

The next question is, when should a mortgagor/borrower begin the mortgage modification process? Once it is determined that, as a result of the hardship, future mortgage payment will not be made, the mortgagor should begin the process and engage the services of a licensed professional. According to an excerpt from a recent article in the Wall Sheet Journal…”Trans Union LLC said it expects the number of delinquent mortgages in the U.S. to double next year…”. So, considering the backlog right now in the Loss Mitigation area of most banks, it is safe to assume that the length of time to process a mortgage modification will increase significantly. As such, if inability to pay you mortgage loan is imminent, start the process NOW. The sooner you start the process the sooner your lender will realize you are trying to work a mutually beneficial resolution. The sooner the lender realizes you are trying to work a mutually beneficial resolution, the sooner the lender will decide to work with you and NOT begin/complete the foreclosure process.

This is a difficult time for EVERYONE and the only way to manage effectively in these times is to have clear, concise and open communication. Start early, form your partnership with a LICENSED professional and remain diligent.

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Categories: Mortgage Modifications

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