Loan Modification Facts and Myths

According to the center for responsible lending there is a foreclosure in the US every thirteen seconds (while there are no moratoriums respectively) Net Net over Short Sale over Short Refinance the Loan Modification makes more sense to the lender / Investor. So why aren't more lenders doing them, first name one that's not? They all are but they literally have thousands of requests per liquidation manager or Loss Mitigator. I had the opportunity to interview a high ranking trainer with Freddie Mac today. She told with out a doubt Freddie Mac is not doing any principal reductions on Loan Modification. She did say they would consider Ballooning or Forbearing a portion of the principal. When I asked her (I didn't ask if i could quote her so she can remain anonymous) what one quote Freddie Mac wants the public to know what would it be, her response "Our number one priority is to do whatever we can to help the consumer avoid foreclosure. We are huge advocates of the presidents plan and the Making Homes Affordable Program, we know there is a problem, we get that, we are a huge advocate of being part of the solution."
A study by the Federal Reserve in Boston finds that since the housing downturn began, only a small fraction of mortgages have been renegotiated to prevent foreclosure, some 3% of seriously delinquent loans. But this isn't because these loans have been securitized and sold off to investors; banks have modified a similar number of loans still on their books. The evidence says it's just not worth it for the banks to do it: Nearly half of all modified mortgages fail anyway, and a significant portion of delinquent borrowers "self cured" and started repaying within a year. Again Loan Modification makes most sense to the lender, not always the consumer. At one point early this year the center for responsible lending stated a 9 out of 10 failure rate for Loan Modifications that were negotiated. Again, I believer that's because the lender was able to convince the homeowner to take a Loan Modification that was in the interest of the lender not necessarily the consumer. Loan Modification just like a Short Sale is a negotiation. Never accept the lenders first offer even if they come back and tell you they will have to re submit for approval and that could take another six months.

-Christopher Rockey