Problems with a Loan Modification: 10 POINTS TO CONSIDER
Excerpted (and expanded upon) from Livinglies Garfield Continuum

Problems with a Loan Modification:

Piles of paperwork and binders from Marin Family Action’s Home Save Project. Each person requesting loan modification is keeping copies of all correspondence and lists of all conversations with their lender. Some of the group members have been “negotiating” with their lenders for up to two years. One of these binders is four inches thick and has a 12-page (and growing) list of who said what to whom and includes dates, telephone numbers, names, badge numbers. If you are in the middle of trying to save your home, we highly recommend getting your binder going immediately. It will be an eye-opener for you to learn just how confused (i.e. inept) your lender is. The mistakes are shocking. The lies emanating from these formerly well-regarded institutions are depressing. The misuse of funds by the very institutions that are purportedly safe places to store our hard-earned dollars is staggering.

1. Borrowers think they are modifying their current loan when in fact they are starting over.
2. The Foreclosing entity (the servicer of your note) lacks standing to bring lawsuit and is not authorized to modify anything since they are not the owner of the loan in question;
3. The Forbearance Agreement is simply used to give the servicer of the note additional income; there is no agreement with whomever holds the note and homes are foreclosed as soon as the last payment is made.
4. Since the real parties in interest are no where to be found, they are taking it upon themselves with the help of their lawyers to steal your property.
5. The borrower is actually getting a new loan which may enjoin borrower from rescinding new transaction.
6. The foreclosing entity is STILL not using their own funds to modify your loan. They are getting funds to lend borrowers through Federal bail outs, insurance proceeds and . . . believe it or not . . . investors. (same process).
7. Their lawyers are not acting in a lawyer’s capacity but as BROKERS; (middlemen) they are getting paid commission on every new loan they help broker.
8. What Does Loan Modification Mean? A modification to an existing loan made by a lender in response to a borrower’s long-term inability to repay the loan. Loan modifications typically involve a reduction in the interest rate on the loan, an extension of the length of the term of the loan, a different type of loan or any combination of the three. A lender might be open to modifying a loan because the cost of doing so is less than the cost of default. However, the percentages of homeowners actually getting effective assistance is extremely low; the lenders are failing.
9. The borrower took the loan out with lender “A,” it has been sold — perhaps repeatedly to an unknown lender “B.” Lender A no longer owns the note, but is trying to modify it, generally against the wishes of the current lender.
10. When the modification is said and done, the borrower will have lender “B” as the lender. What happened to lender “A”???