RealTown's RealTalk

I am fairly new to the short sale process, although the school of hard knocks is a very efficient teacher. I am seeking feedback concerning loan mitigation services. I have been approached by a company that has attorneys on staff who will handle the mitigation for their clients. They charge for this service, of course, but accept no fee until they have conferenced with the client to determine if they are a good candidate for mitigation. If they are not, the consultation is free. If they "qualify", they are charged $1,500 to begin the process. They do not owe the remaining $2,000 to $3,000 until the mitigation is successful, and part of the negotiations include getting the lender to give the client 3 months mortgage free, so they can pay the mitigation company. They showed me examples of successful mitigations where they stuck to getting 30 year fixed rates. In one case, they got the interest rate down from 11% to 7% (it was in "08 and the clients had not-so-great credit scores). First and seconds were consolidated, too.

This sounds "pricey", but I assume if one hired a lawyer on one's own, it would cost as much, or maybe more. I understand that FHA or some other government agency (Fannie Mae?) will also assist borrowers in renogotiating or mitigating their loans, at no charge. How efficient are these government assits? Would it be worth it to hire this company because they will get the job done and quickly? If I refer to them will I really be helping people?

I thank you, in advance, for your advice and counsel,

Carolyn R. Ward

Associate Broker, Chocolate Properties Real Estate Consultants

Albuquerque, NM

Hi

I really think you have this a bit wrong. What they are doing is Loan Modification. Loss Mitigation is what they do on a short sale. However If they are charging your client over $1500 to do a Loan Mod. Run do not walk away. Plus many many banks are doing them FREE these days anyway.

Paul Antonelli
E-Pro Realtor
Coldwell Banker Ackley Realty
"Your Residential, Short Sale & REO Specialists!"
3264 Greenwald Way, Kissimmee, Florida 34741
Office: 407-846-4040 Fax: 407-846-3407
Cell: 321-443-4028
E-mail: Info@PaulAntonelli.net
Website: http://www.OwnAHomeInCentralFL.com
Local Foreclosures: http://www.paulantonelli.net/deals

Carolyn,

There are realtors completely qualified to manage the process without those "fees." Look for a "Certified Distressed Property Expert" (CDPE) in your area to assist and I believe you will be doing a genuine service for your client. I hate to see "predatory" fees imposed on families already suffering.

Keith

Hi --

Loan mitigation services are priced all over the board. A suggestion that over $1,500 is too much is too general a statement. I have seen pricing from about $500 to $5,000, with $1,500 to $3,500 the "normal range".

Hiring the cheapest lawyer around is not always a good idea. Nor is getting the most expensive one around a guarantee of success. It's all about service and success rate.

The one thing to watch out for is the many salespeople out there that are pushing these products. While most are simply spouting the party line, that won't be an excuse should things go wrong. Real estate agents especially will be vunerable to complaints and possible law suits should things go badly after they pushed a particular servicer.

And definitely check on your state statutes for requirements. Here in Minnesota a loan originator license is require. Even for an attorney. Yet, how many nations companies are pushing for business in our state that don't seem to know that... Lots.

If one associates with a loan modification company do your due diligence. Don't simply believe what the company tells you. And remember that price is just one of several important factors.

Just like in real estate sales.

Steele, Foreclosure Specialist

I know I will get a back lash for saying this but a 2-3 day course on distressed properties does not make one a specialist. Nor does 3-4 letters behind one's name.

Designations are a dime a dozen these days. New ones coming out literally all the time.

While I hear that several are very popular and that the education is very good, it is still elementary at best.. Experience and hands on training is completely lacking in these courses.

Again, not picking on any one designation. If you learn from a course, it is a good thing in and of itself. But to call oneself an expert after 2-3 days...

Now there is a lawsuit ready to happen.

Steele

Thank you Peter, for some fabulous info & links... which I will save, just in case....

Steele says (paraphrasing) no-one should do this stuff without being experienced.... it's the old chicken or the egg... and I agree...
IMO, no matter how smart, savvy and experienced you are, there are no guaranties of success, because everything is dependent upon the "mood" of the lender.

Deede was trying to do some of this, for her own son, I think, and regardless of her business model, most of us acknowledge her as having a broad spectrum of knowledge & experience.... and as persistent as she was, she was encountering incredible difficulty and lack of co-operation.

I also think, that one should have a background doing regular mortgages, before trying to step into that world, whether it is loan modification or mitigation.
Someone that has been a mortgage officer or broker for 10yrs or so, will be familiar with terminology, buzzwords, possibilities, pitfalls, and so forth, that would be lost on the rest of us (even experienced old-timers like me)... When sprinkled in a sentence, you should know what an "O-O" is, or an "EE", and many other little lingo things like that, or you can lose the essence of the statement.... many newer agents have never had to figure points & buydowns & origination fees, if that stuff pops up in negotiations, will it all have to come to a screeching halt, while you catch up.... financing is a Big World, and as Realtors we usually only skate along the surface... a quick pre-qual to determine what our buyer's needs are (VA, FHA, first-timer, B or C paper, self-employed, foreign national, etc), and then we send the buyer to a suitable lender or two...
It's great that Minnesota requires lender licensing to do these, and I don't know which states require it, but I hope Texas is one. I'd take it a step farther, and require maybe 2 yrs experience or apprenticeship with a loan officer.
These situations are MUCH too important to trust to amateurs.

Which service company to trust? Probably depends what day it is...
But as was pointed out, you could end up getting sued for suggesting someone that doesn't perform. By the time we figure out the very best ones, we probably won't need them anymore...

Last comment... so 55% of the modified loan ended up back in arrears/default.... how about the 45% that got to SAVE their homes? Some of those 55% were probably there due to job loss, and I don't see anything wrong with floating them for more than 6months.... how is that worse than taking the house into inventory and have it sit there unsold or vacant for a year.... Yes many REOs sit vacant for a long time while title snafus are ironed out, etc.

Lindy in Houston

It is interesting that several states are getting their noses into this business and telling who and who should ot be doing it.

They may be looking at restraint of trade lawsuits in the near future. Licensing does make sense but to suggest a certain group should not be doing loan mods seems to be crossing a line.

Steele