Loan Modification Program: How to Get a Bank Loan Workout and Modify Loan Terms

Feb 7th, 2009  
by IrvineRenter  in

Astute Observations

Astute Observation by granite
2009-02-07 06:04 AM

I got a kick out of the article on Mating Men on your website.

“Our competition for economic displays drives our consumer economy and culture of affluence,? said Kruger. ?In terms of the current mortgage crisis, the findings suggest that one of the reasons we overextend ourselves is the we?re basically in a status race. We have expectations that spiral upward as people make more money and everyone wants to show they are better than average.?”

Once everybody is enabled, its off to the “Irvine status races”.

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Astute Observation by Morgan
2009-02-07 01:08 PM

Thanks Granite - that was written by Jay Hammond, one of our writers. She’s been covering the various parts of the blame game and I particularly enjoyed that biologically-driven rationale.

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Astute Observation by mav
2009-02-07 07:53 AM

Irvine Renter,

Next weekend can we get a post about this:

https://www.getsnuggie.com/flare/next

or at least something on the intrinsic value of gold, and how we should all put ourselves on the gold standard, you know one of those commercials where they say: “If the price of gold soars to $3000 an ounce the gold on this table would be worth $XXX,XXX ......”

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Astute Observation by IrvineRenter
2009-02-07 08:23 AM

Actually, that might make for an interesting weekend thread topic. We could have the big debate between the gold bugs and the rest of the world. Awgee is a gold bug, and he would probably argue well for buying gold. Personally, I think gold only has value because gold bugs think it does. Of course, there are enough of them to make a big market for it, so it does have value.

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Astute Observation by mav
2009-02-07 09:49 AM

that debate is like beating a dead horse…
I’m on your side of the fence with that one…. why do governments guard gold with guns and blood?  reverse psychology

At some point the value of gold will be based on the cost to produce it.  That could be in 20 years or 500 years, but it will happen…. and the cost/value will be driven down.

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Astute Observation by Eeek
2009-02-08 10:47 PM

1. Gold always increases in value in the long run.

2. Gold prices don’t fall to zero like stock prices, so it’s safer to invest in gold.

3. The bubble prices were driven by supply and demand.

4. They’re not making any more gold (though they are still digging it up out of the ground I guess)

5. Rich Chinese (or Europeans, or Arabs) are driving up gold prices.

6. If you don’t buy gold now, you’ll never get another chance.

7. Gold is worth whatever fools will pay for it.

OK, I admit, a couple of those were a stretch to say with a straight face but two or three years from now I’ll probably be wishing I had listened to me.

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Astute Observation by Perspective
2009-02-07 10:13 AM

A letter to the editor in Feb’s Cal Bar Journal from someone at the Dept of Real Estate provided interesting commentary on the explosion of these loan mod outfits. The letter’s a cautionary tale for lawyers thinking about adding loan mods to their practice, but I think the IHB community might find it interesting and it’s definitely on topic for today’s post.

“Diane Karpman?s December article, ?Beware the meltdown?s temptations,? provided several important and timely cautionary notes to lawyers who might be tempted to participate in what you aptly called ?new business models? related to loan modifications. The last paragraph states that ?lawyers can ? hire in-house loan modification agents so that they can be properly supervised.?

The California Department of Real Estate has learned that some lawyers, using this concept, are offering to hire real estate brokers and salespersons and to supervise the real estate licensees as ?paralegals? or as some sort of legal assistants. But this scenario raises a number of issues, which arguably puts the lawyers back in the same ethically questionable realm that the first part of the article addresses.

The California Mortgage Foreclosure Consultants Act was enacted to address the fraud, deception, harassment and unfair dealing by foreclosure consultants relative to homeowners whose residences are in foreclosure. With rare exception, the act prohibits the collection of an advance fee or the payment of compensation in advance of services being performed once a Notice of Default has been recorded. Real estate licensees are covered by this prohibition.

The applicable ?lawyer? exemption is for ?[a] person licensed to practice law in this state when the person renders service in the course of his or her practice as an attorney-at-law.? Section 2945.1 (b)(1).

If a lawyer hires ?in-house loan modification agents,? are these non-lawyers performing legal services? Or are they performing ?non-legal? real estate-related loan modification services (which would arguably require a real estate license)? Are they practicing law? What legally related training do such ?loan modification agents? have? If the lawyer has collected a retainer fee for the services, is the lawyer sharing that fee for legal services with non-lawyers? How is the compensation to the in-house modification agents made? Commission? Salary? Hourly? In the event of an unsuccessful loan modification, the fee(s) payable to the lawyer may be shockingly large when compared to the lawyer?s normal hourly rate charges.

Certainly, there are many more questions and issues that can be posed. Moreover, there are a number of other problematic scenarios which bring into question the applicability of the ?lawyer practicing law? exemption. I have lingering concerns about the statement that lawyers can hire in-house loan modification agents.”

http://calbar.ca.gov/state/calbar/calbar_cbj.jsp?sCategoryPath=/Home/Attorney Resources/California Bar Journal/February2009&MONTH=February&YEAR=2009&sCatHtmlTitle=Opinion&sJournalCategory=YES&sCatHtmlPath=cbj/2009-02_Opinion_Letters-Editor.html&sSubCatHtmlTitle=Letters to the Editor

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Astute Observation by Morgan
2009-02-07 01:11 PM

That is a great article and an important part of the reason that I chose to support a DIY program. There are just too many sharks in the tank as it is right now.  There are too many attorneys charging outrageous retainers to do what amounts to admin work and there are also too many folks operating outside of the law when it comes to collecting fees and providing “help” for loan modifications.  There is absolutely no law, however, against an individual who wishes to modify their own mortgage, which is why I think, if you have the time and desire that you should do it yourself.

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Astute Observation by USCTrojanCPA
2009-02-08 12:54 AM

I don’t know about you guys, but there are hundreds of folks and firms that are now doing loan modifications.  I mean, if you go onto the jobs section of craigslist you’ll see hundreds of posts looking for people who can do loan modifications for a company.

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Astute Observation by Landmark
2009-02-08 08:25 AM

I know multiple mortgage brokers and ex-mortgage brokers that have either hired one in house attorney, or have partnered with an outside law firm all together and simply switched their loan originators to “modification” support staff. Moreover, many of these mortgage brokers were the one’s that manipulated documents when stated income loans were running crazy. Now they’re doing the reverse, I think that Irvine renter coined the term “reverse liar loan”. This area needed to get new regulation 6 months ago. I think that a good argument can be made that the only mod that should be allowed is for those people that can afford a fully amortized, 30-year fixed loan, at the same rate offered to everyone else, however, they can’t refinance only because of lack of equity. Of course, the profit sharing etc the banks often put into the new terms may help in the short term, they will bite the banks and our country in the long term as this generation of homeowners doesn’t have a pot to piss in come retirement time. Moreover, I’ve heard that 60% of mods from the beginning of this year are back in foreclosure. This needs to be addressed.

I don’t know about you guys but as an agent I really want to learn how to complete a short sale in 9-days!!!

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Astute Observation by damania
2009-02-08 01:18 PM

“Moreover, I?ve heard that 60% of mods from the beginning of this year are back in foreclosure.”

Because these folks are not credit worthy regardless of the terms.

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