If a foreclosure sale is less than 30 days away, the only option may be to do a bankruptcy where appropriate and use the time afforded by that process to negotiate with the lender. If a California bankruptcy is necessary, an additional legal fee is required to cover the additional legal work. Payment plans may be an option.

REMEMBER: maximum success is possible when we receive the client’s information as far in advance as possible before the filing of the notice of sale.

To get started on a Loan Modification case, simply complete the form in the upper right hand side of our website.

WHAT IS LOAN MODIFICATION?

Loan Modification is the alteration or change in material terms or characteristics of a mortgage loan contract, generally due to the inability for the borrower to make payments according to the terms of the original mortgage contract. If the lender voluntarily agrees to modify the terms of the mortgage contract, the idea is to make it affordable for the borrower so that they can make the modified payment throughout the term of the loan.

WHAT LOAN TERMS CAN BE MODIFIED?

Lenders will generally consider recapitalizations (moving back payment onto the principal of the loan) to make the borrower current again, pay rate reductions (lowering the borrower's interest rate, and accordingly the borrower's payment) to make the payment more affordable, and in some cases principal reductions. Principal reductions are rare and generally only are an option on junior mortgage loans (2nd's, 3rd's, etc.).

IF I AM CURRENT AND CAN AFFORD MY PAYMENT, CAN I REQUEST A LOAN MODIFICATION TO GET A LOWER PAYMENT?

If you are current on your mortgage payments, and there is no "problem" with your loan, loan modification is not a good option, and we would advise against it. Generally, loan modification is "Plan B", if you simply can not afford to make the mortgage payment, had a temporary setback and want to get back on track, or your mortgage is about to adjust to a level where you can not afford it. "Plan A", if it is an option, is to make monthly mortgage payments and comply with all terms and conditions of the mortgage contract.

CAN I DO THIS MYSELF?

There is a chance a borrower could pull off a loan modification or pay rate reduction without the assistance of an a professional. As many borrowers know from experience, there is a thick and unintelligible layer of resistance at mortgage lender's loss mitigation departments to any suggestion of a workout from the borrower directly. They tend to take notice to contact from an attorney however. Generally, McFarlin & Geurts loan modification attorneys are able to cut through much of the red tape and bureaucracy that permeates the loss mitigation business. We stay current on "lender guidelines" and keep careful records on how to most quickly get our clients loan modification requests before the actual "decision maker" in the lender's organization. Many consumers who attempt loan modification on their own, end up failing and, worse yet, may moke matters worse because now they have a previous "turn down" to overcome if they do later hire a loan modification attorney.

HOW LONG DOES THE PROCESS TAKE?

There is no exact answer, we can only offer you estimates with no guarantees, warranties or predictions. Generally, the process can take only a few weeks, or up to six months or longer. If a government guaranteed loan is involved (FHA for instance), the process will take longer to work out. Fortunately, most lenders will work quickly to approve a loan modification program once they have received a complete package, this is another reason it is advisable to work with a loan modification attorney, the "waiting" does not even start until the lender receives a complete package, which McFarlin & Geurts loan modification attorneys will, of course, submit only once it is complete under the lender guidelines.

WILL THE LENDER FORECLOSE ON MY PROPERTY DURING THE PROCESS?

Most lenders will postpone the sale of your property, or put the foreclosure "on hold" if they have received a complete package at least two to three weeks before the foreclosure sale date. Obviously, we can not guarantee the lender will stop foreclosure, but generally, a clear indication from the borrower that they are willing and able to complete a loan modification works in your favor.

IF NOT APPROVED, HOW MUCH TIME DO I HAVE BEFORE THEY SELL MY HOME?

Every situation is different, typically in California the entire foreclosure process can take as little as four months. The faster we start the loan modification process and the more time we have to work, the greater the likelihood of loan modification success. If you are unsure of the foreclosure laws in your State contact a local real estate professional.

WHAT IF MY FORECLOSURE SALE IS VERY SOON?

If a foreclosure sale is less than 30 days away, naturally, our chance of success is diminished, but all is not lost. Some lenders actually prioritize loan modification requests based on the time period until any foreclosure sale. We have had some of our fastest loan modification answers (literally within a few days) when a foreclosure sale is immanent. There is no reason to delay, if you are serious about giving yourself the best chance possible to retain the property through a loan modification, our loan modification attorneys need time to work. Remember: maximum success is possible when we receive the client's information as far in advance as possible before the filing of the notice of sale or other foreclosure documents.

CAN I FORCE THE LENDER TO APPROVE A LOAN MODIFICATION?

Generally, loan modifications are voluntary. As of yet, there is no government program which forces lenders to modify mortgages or give borrowers principal reductions. Understand a loan modification is a negotiation between you (the borrower) and the mortgage lender, generally through a loan modification attorney. You are presenting them with an offer backed up by your personal financial documents essentially saying..."this is what I can afford". "If you will work with me, I can assure you of a stream of payments going forward, but I can not meet the terms of the original mortgage contract".

WHAT DOCUMENTS DO LENDERS ASK FOR?

Typically, lenders request a statement of your household income and expenses (sometimes called a "worksheet"), paystubs substantiating the income you show on your worksheet, bank statements further substantiating the income and verifying monthly expenses, tax returns showing this income is your historic, or close to your historic income level, proof of property insurance so the lender knows they're covered for any natural disaster of loss, a hardship letter explaining (in your own words) how you got into the predicament you're in, a list of all your other debts and obligations, and if you are represented by a McFarlin & Geurts loan modification attorneys, an authorization to allow us to negotiate on your behalf.

WHAT IF I CAN'T PROVIDE CERTAIN REQUIRED DOCUMENTS?

The documents are typically required, but if you can not provide them, an explanation of why and a substitute document may suffice. For example, many of our clients are self-employed and therefore don't receive "paystubs". In this situation, lenders typically accept a profit and loss (P & L) statement in lieu of paystubs.

WHAT IF I VERY MUCH WANT TO KEEP MY PROPERTY, BUT MY HOUSEHOLD INCOME IS SHORT?

This is another common situation. You have all the desire in the world to retain your property, but simply can not prove income sufficient to cover the mortgage payment, plus all other necessary living expenses. The options you have are simply to either find a way to receive more income by taking on a second job or renting out a room in your home, or to cut down your monthly household expenses substantially.

CAN I RENT A ROOM TO A FAMILY MEMBER OF FRIEND?

Generally, so long as you are receiving rent payments, from whatever source, and you can document this arrangement with a lease or letter from the renter verifying the property address, name of landlord (you), and the amount paid monthly, lenders have generally been willing to accept this in lieu of actual "earned" income. This decision is made on a case by case basis by lenders however.

DOES THE LENDER CARE THAT THE PROPERTY IS WORTH MUCH LESS THAN WHAT I OWE?

Sadly, they usually don't. The fact that a property is located in a rapidly depreciating market (hard to think of real estate as a depreciating asset, but it often is right now), may play into their decision marginally, but by no means does it guarantee you will receive exactly what you want from the process. What does work in your favor though is that the lender will simply own the house (through the foreclosure process) if they don't keep you in it somehow. This can be a strong motivational factor.

WILL THE LENDER CONSIDER A 40 YEAR MORTGAGE TO MAKE PAYMENTS EVEN LOWER?

Actually, yes. Lenders do sometimes re-amortize loans into a 40 year term to make the payments as affordable as possible. Don't expect it, but it's also not out of the question.

WHY WON'T LENDERS DO PRINCIPAL REDUCTIONS USUALLY?

There is no "defined" or established answer, but our educated guess is they are not willing to just walk away from future appreciation, and they have taken the position that you (the borrower) took the "market risk," not them. They took the "default risk" (risk that you would not repay the loan, but you took the "market risk" (risk the value would decline). Additionally, once they agree to a principal reduction, they have to immediately report the "loss" to their shareholders. Due to the voluntary nature of this (hypothetical) loss, it is not recoverable in the future.

DOES THE BANK REALLY WANT MY HOUSE?

Actually, No. In most cases, the last thing the lender wants is yet another foreclosure property to take back in a declining market, have to rehab it, maintain it, pay property taxes and Homeowners Dues, pay property insurance and then market and sell the property for ever declining values. The problem is, if mortgage payments are not being made, lenders have certain covenants and responsibilities to shareholders or beneficiaries and simply have not choice. If a modification proposal does not fit into their guidelines or fit into a current "program" they offer, they must decline the modification and move forward with the modification.

DO I HAVE TO BE LATE TO REQUEST A MODIFICATION?

Generally, no lender will consider a modification if the borrower is not behind on payments. If the borrower is making scheduled payments, obviously he or she has the financial ability to make those payments and the lender does not perceive there to be a problem which requires modification. Once the borrower is 30-90 days late on payments, the lender begins to view that loan as "non-performing" and therefore place it into the "loss mitigation" and/or "collections" department. Once the matter is with the loss mitigation or workout department, a loan modification proposal can be discussed.

MY LENDER HAS APPROACHED ME WITH A MODIFICATION, SHOULD I ACCEPT IT?

This scenario is becoming more common lately, lenders are taking a pro-active approach and attempting to offer more favorable terms straight away. Generally, if the terms the lender is offering are favorable and meet the financial needs of your family, there is no need to delay. If the path to getting back on track with your lender is laid out before you, you should consider taking it. Alternatively, if the "offer" the lender has made is over-burdensome, will not fit into your budget, and you can't pay what the lender is demanding, it is likely they can do better. At that point, you may benefit from speaking to a qualified loan modification attorney.

MY LENDER HAS STARTED THE FORECLOSURE PROCESS, CAN I STILL GET A LOAN MODIFICATION?

If you are already in foreclosure, it is true you have waited and procrastinated, probably assuming you would somehow "figure it out," but things have not materialized. All is not lost. Lenders will definitely consider loan modifications during the foreclosure process. Keep in mind, however, under the California Foreclosure Consultant Act, only loan modification attorneys can represent you once foreclosure has begun. It is unlawful for a non-attorney to take on, or continue representation after the Notice of Default has been filed.

EXPLAIN THE LOAN MODIFICATION PROCESS STEP-BY-STEP?

STEP 1: GETTING REALISTIC. Realizing you need help and that if your financial affairs continue as they have been going, you will end up in foreclosure;

STEP 2: FINANCIAL ANALYSIS. Analyze your finances to determine if the shortfall (which caused the realization of step 1), was temporary or is a fundamental problem that will not correct itself. If you anticipate a correction in your financial condition which will allow you to recover in some way, loan modification may be a good option. Most simply, income must exceed monthly expenses;

STEP 3: DECIDE ON A GAME PLAN. If you are a do-it-yourselfer, and have ample time to dedicate to learning about lender guidelines, loss mitigation department requirements, real estate law in general, and the patience to call continuously and hold indefinitely, then approaching your lender yourself is an option. If you decide to do it yourself, you MUST have the time and dedication to follow through. Beginning the process yourself, and then "getting busy" or not being available when the lender calls you back can "sink the ship", and actually make you worse off than when you began because now you have a loan modification "turn down," in your file.

STEP 4: DECIDING ON A PROFESSIONAL TO WORK WITH. If you decide to work with a loan modification attorney, you have given yourself the best chance of a positive result. Of course results are not guaranteed, but loan modification attorneys can interpret and evaluate mortgage contracts as well as loan modification contracts and advise you as to whether it is in your best interest to sign off on the terms proposed or not. Non-attorney loan modification companies can not give you legal advice under any circumstances.

STEP 5: GATHER DOCUMENTS AND INFORMATION. In order to submit a "complete package" to your lender's loss mitigation or workout department, you'll need certain documents and information. These items have been identified and discussed previously

STEP 6: MAKING CONTACT. Loss mitigation departments are typically a complex web of interconnecting phone and answering services designed to "service" borrowers by making it extraordinarily difficult to reach a live person on the phone. A borrower requesting a modification (or their loan modification attorney representative) must typically first transmit a "complete package" (discussed previously) to the lender, and then follow up to have a "negotiator" assigned to the file. The negotiator is the actual person who will be interacting with the loan modification attorney, or the borrower

STEP 7: NEGOTIATION. Typically there is some type of "back and forth" process that takes place with the negotiator regarding documentation. Frequently, the negotiator is concerned with a particular item in the package, or requires additional information or documents. These documents or information must be provided for the file to move forward.

STEP 8: THE DECISION. After all the documents are considered, a loan modification decision is made. In some cases, this takes the form of a flat "turn down" where the lender simply offers nothing. This is rare however. In most cases the lender will propose some change in loan terms, repayment schedule, interest rate, payment or other material change to the mortgage contract. If these changes are acceptable, and make the loan affordable, the modification should be strongly considered. If the proposed changes do not materially change matters, the negotiation can continue. However, there is no guarantee that if the lender's offer is declined that a subsequent offer will be better. Accordingly, there is some risk involved in declining the offer.

STEP 9: COMPLETION. Once the actual terms of the loan modification are offered (usually orally with the negotiator), the lender will mail out to the borrower the actual Loan Modification Agreement. The borrower must sign, in the presence of a notary, and return this document to complete the loan modification.

WHAT IS A HARDSHIP LETTER, AND WHERE TO I BEGIN?

The hardship letter (which is typically a required document for loan modifications), is simply a letter explaining why the homeowner has fallen behind on their payments. Most clients have experienced a temporary event which led to the delinquency, but that situation has been corrected and the borrower is ready to move forward. The most common hardships are: loss of job or cutback in wages, medical illness, divorce and death in the family, business failure, crime victimization, military duty, unexpected mortgage payment adjustment, temporary disability or other medical event. The lender wants to see that something unfortunate happened, but that the situation has been corrected and the borrower is "back on track" and prepared to make mortgage payments going forward.

ARE THERE "GOOD" LENDERS TO WORK WITH OR "BAD" LENDERS?

Not really, all institutional lenders now have some type of loan modification or loss mitigation program in place to service borrowers.

CAN WE INCLUDE INCOME FROM PERSONS LIVING IN THE HOUSE, BUT NOT ON TITLE?

Yes, it's a common scenario and lenders will consider non-title holders income as well as rental income if one or more of the rooms in the house are rented, even if rented to family members.

DOES MY CREDIT MATTER FOR A LOAN MODIFICATION?

Generally, no. The lender is not re-qualifying you for a loan, they already made the loan, now they are simply evaluating whether they can "salvage" the situation and agree to begin accepting payments again.

WHY IS MCFARLIN & GEURTS THE RIGHT CHOICE?

McFarlin & Geurts attorneys were the innovators of loan modification back in 2006 when the practice area first began. Attorney Timothy McFarlin had been representing Plaintiffs in TILA, RESPA and HOEPA litigation and found that rather than full blown litigation, lenders were typically willing to settle these matters with more favorable terms for clients. Obviously, with the great demand for these types of loan modification services, many attorneys and loan modification companies have entered the marketplace. However McFarlin & Geurts continues to provide service and attention to detail for our clients. We are not a loan modification "mill" and take on only selective cases where we have a very good chance of success. If we do not firmly believe we can help you and make you better off, we will not agree to represent you. Of course it is free to speak to us about your matter toll free at (888) 728-0044.