Loan Modification Assistance Rules Change
or Are Reinterpretted
Erin Toll with the Division of Real Estate, which is part of the Department of Regulatory Agencies (DORA) for the State of Colorado, has recently published a new “Position Statement” about Loan Modifications (aka Forbearance Agreement).
The new position seems to be that it is not the place of Real Estate Brokers to assist in the Loan Modification and that anyone that does assist either needs to work for the Government agencies or needs to have a Mortgage Brokers License.
This is fine with me as I would never charge for this type of thing anyway (so it is just more free work that I don’t need) and the new rules say a Mortgage Broker can charge up to $300 even if the loan doesn’t go through.
I assume if it does, the Bank will pay them a commission just like they pay a Real Estate Broker a commission in a short sale.
It think the State of Colorado and Erin Toll are trying to protect members of the public from being taken advantage of by unscrupulous entreprenuers charging large fees for attempting a mortgage modification.
It points out that it doesn’t cover people who work the help lines set up by HUD or other government agencies. So please take advantage of these services. Like the Colorado Foreclosure Hotline that can be reached at 1-877-601-HOPE. Or on their website at http://www.coloradoforeclosurehotline.org/ .
I think one thing worth noting is that few point out that the homeowner themselves can often do a workout with the lender directly. It just takes a little education and confidence to get it started and then a little diligence and persistence to follow through with it.
They will require a bunch of documentation just like in a short sale. The will want taxes, paystubs, bills, a loan application and/or financial statement….divorce records, doctors bills, a hardship letter. Its a lot of stuff but it isn’t rocket science.
Tips for Your Own Workout
A few tips for homeowners attempting their own workout:
- Put your loan number on each page of paperwork that you fax or send into the bank.
- If you are tech savy and have a scanner, ask the loan workout representative if you can email them a pdf file of the scanned documents. But don’t just assume they got your if you do this. Make sure that you get them to send you a confirmation of receipt and or confirm it with them on the phone.
- Be dilligent in trying to contact your lender’s workout representative, they are busy, this is why often these days it can be easier to reach them by email.
- Ask them to email you something and then you will often get their return email address that you can try corresponding to.
- If your person won’t call you back try going back to the generic queue and waiting for a real person and explain you have been trying and trying to get ahold of this person and it is urgent (if it is) and they will often be able to “buzz” them in such a way that they will actually pick up their phone.
To me email in some ways is a better form of communication for this type of activity because it creates a trail, but its not perfect and its not always private. But for example the required list of documents the lender wants is much more easily digested in clear readable form of an email than you trying to write it down as they quickly rattle it off.
What I can do for someone is help them sell their home. If this requires a short sale so be it. If they want to keep their home then they should try a workout or a reorganization bankruptcy with a workout.
Right click the following link to download a pdf file of the position statement.
state-of-colorado-dora-position-statement-on-loan-modifications
The position was published first on November 19, 2008, then revised on December 11, 2008.