An attorney in Sacramento wants to charge me an up front fee of $3250 to negotiate a principle reduction and help me drop a 2nd mortgage with Countrywide. I almost went for it, but then I found this:
Legitimate loan-modification services exist, but they do not charge an upfront fee for negotiating with lenders. Instead they typically charge a percentage of the loan value upon successfully completing a negotiation for better terms with the lender. Homeowners can also seek to modify the terms on a mortgage for free by contacting the lender directly or reaching out to a legitimate housing counselor. The Hope Now Alliance (888-995-HOPE) provides referrals to counselors approved by the U.S. Department of Housing and Urban Development.
I called spoke to someone for free who explained that if Freddie Mac is the holder of my first loan, I can ask Countrywide if they will give me the FHA “hope for homeowners” work out which includes a principle reduction in some cases and a new interest rate with a 40 year loan. CW says this won’t be available until at least the end of February. They aren’t doing principle reductions right now. When my interest rate adjusts next year, how much would I be paying per month on the first? CW won’t say. It depends on the rates at the time. If it is more than what I’d pay for the 40 year loan, take the 40 year. After that, I can see if Countrywide will let me talk to Chase Bank directly (the holder of my 2nd mortgage) to see if I can negotiate a way to lower the monthly payments on that one. If these options don’t work out, ask Countryside what price they will accept for a short sale. They won’t say. Or ask for a deed in lieu. We can try for that, but it won’t stop the foreclosure proceedings and takes up to 30 days according to CW. Both of these will still hurt your credit, but you will avoid the foreclosure attorney fees, says the Hope Line.
The bottom line message from the Hope Line counselor is that they can do what the attorney can do for free and there is no better deal that the attorney can get you that you can’t get yourself by negotiating with Countrywide or by working with the free Hope Line counselor.
Update: 2/9/2009: My second attempt at a loan modification with Countrywide has failed. I don’t make enough per month (take home) to afford the payments on my home own according to the Countrywide negotiator, even if they modify it to a 40 year loan. I would make enough if Countrywide would qualify me for the Hope For Homeowners workout via Freddie Mac which includes a reduction of the principal to current market value. Here is more information that sounds good, but it is used to sell something:
A Countrywide loan modification featuring a reduction in the principal balance is available to certain borrowers who meet the lenders requirements for this loan modification option. Although not every homeowner will be offered principal reduction as part of their loan workout, some homeowners will qualify for this very helpful option. Here is some information to help determine if you might be eligible:
Eleven states were involved in the predatory lending suit in which Countrywide settled claims worth approximately $8.6 billion dollars to homeowners holding risky loans. Since the original settlement, two additional states have been awarded settlements to help borrowers as well. For borrowers in these states, a principal reduction is a viable option that homeowners can apply for. Here are the eleven states as well as the three additional states included in this special Countrywide loan modification program:
Arizona, California, Connecticut, Florida, Illinois, Iowa, Michigan, North Carolina, Ohio, Texas and Washington-as well as Tennessee, Mississippi and Pennsylvania. If you live in one of these states and your home loan was originated between January 1, 2004 and December 31, 2007 you may be eligible to participate in the Countrywide loan modification program offered as part of the predatory lending lawsuit. If you do not, you can still apply for help to lower your payment and avoid foreclosure.
Homeowners who are stuck in Pay option Arm loans where the loan balance actually increases with each minimum payment made are good candidates for a principal reduction. In areas where the home values have declined significantly, many borrowers find themselves underwater-owing much more on their mortgage than their home is worth. Most borrowers did not understand the risks involved with these loans, and now find themselves with few options except to apply for a loan modification program. The Federal government is now encouraging all lenders to consider principal reduction for borrowers who meet certain requirements.
Each Countrywide loan modification is reviewed on a case by case basis, but borrowers can increase their chance for approval by knowing the lender’s guidelines for acceptance and how to complete the application properly so it meets the approval criteria. Homeowners are encourage to apply for a Countrywide loan modification as the lender has set aside billions of dollars to assist borrowers stay in their home. Help is available for those who know how to get it, so make sure you take the time to research, learn and prepare as you search for ways to stay in your home.
Called Greenpath Debt Solutions today. 877-369-7284, an affiliate of the Housing Alliance, a HUD approved agency. I called to ask them how to qualify for the FHA “hope for homeowners” work out. I was told today by Countrywide that the “H4H” workout guidelines will not be available until April. Meanwhile, I’m attempting a third modification after updating my budget info with Countrywide.