Schwarzenegger Signs New Loan Modification Law
By Heindrick • Jul 10th, 2008 • Category: Finance, Most Popular
On Tuesday, Governor Schwarzenegger signed a hopeful law that would help handle the current California Housing crisis. The law states that lenders must properly contact borrowers by phone or person discussing possible loan modifications before proceeding with any foreclosure processes.
What does this mean for you?
This law will help make loan modifications and adjustments more readily available to those in trouble. To be honest, there are a good percentage of homeowners who have never even heard of loan modifications. Hopefully, this will help lenders make such modifications more popular and allow their borrowers from feeling trapped and without help.
While this is no quick-fix , this is definitely a step in the right direction. Personally, there should be no reason a lender isn’t willing to step in on its own to help modify a troubled homeowners loan. For those that did not know, a foreclosure costs a lender much more than it would to adjust their loan instead.
Foreclosures Costs Banks More
Reason being, they must file the necessary proceedings and then list the house for auction. Now if this process is not successful (which is guaranteed to take months by the way) , the bank is now stuck with another property and must file it in their loss of REO’s. Keep in mind, that during all of this time the lender has essentially lost out on any mortgage payments on the property.
A loan modification is not simple and still takes time, but in the meantime, the bank still has a chance to collect its payments and avoid another property being stuck in their bulk portfolio.
Other Key Benefits
in addition, the popularity of loan modifications should also help other lenders to follow suit during this mitigation process. Ask anyone who has been through a modification, and they will tell you it’s no easy feat. At best, it may feel like another refinance - on average, it could takes months before you reach an agreement. At worst, it could take months and still end up in the foreclosure process.
Either way, it is still a very viable option for troubled homeowners to explore. Keep in mind however, there are now companies offering to do loan modifications themselves. As a mortgage consultant, we advise clients to be aware of any fees to be paid. Reason being, a loan modification can be done by any homeowner themselves. Granted there are certain individuals who are experts at loan mods or may have special connections, there are still those few that will be trying to make the quick buck.
- Related Posts:
- WaMu Lawsuit – Don’t Try to Trick the Loan Modification System
- Wachovia Officially Waives All Prepayment Penalties…
- Trouble for Wachovia (status: Confirmed)
Heindrick is is a licensed mortgage consultant - specializing in residential home loans at a real estate firm in the Bay Area.
Send Heindrick a Message | All posts by Heindrick
Hello. I was reading someone elses blog and saw you on their blogroll. Would you be interested in exchanging blog roll links? If so, feel free to email me.
Thanks.
@Susan: You should have received an email.
Hello…I came across your website…I have been trying to get a loan modification with IndyMac…I have an attorney who doesnt seem to be doing anything…When I got the loan it was with no docs…now they are requiring new statements each month with full dics…It was my understanding that a loan modification was simply that…I would not need to requalify for the loan I already qualified for…am I right? if so, can you point me to a law or statute to assist me? Thank you!!! Allen
my mortgage wachovia i apply they did not aproved please help me my mortgage rate adjust i want afix rate
Very useful information . Thanks for sharing. many folks are in need of a loan modification lawyer or a real estate agent show specializes in short sales.
I found your blog on google and read this great post on loan modification. I just added this site to my Google News Reader. I Look forward to reading more here in the future.
Hi, I am looking for the Ca law for people asking for loan modifications that are not delinquent on their mortgages and have an agreement with their lender to pay less while the modification is being processed, for instance, I am with CIti, I asked for a loan mod and they gave me a lower payment from $1800 to $1500 per month while the process happens, this is since May, I had noticed my credit showed late pays on my mortgage I called Citi they told me that we are protected here in CA by a law they can not put derogatory credit on our report while doing a loan mod and making payments on time, so they sent a nice letter to all of the credit agencies regarding the slow pays being inaccurate, I just need to know what this law is I am having issues again and want to go in with amo..