short sale
short sale vs foreclosure

Search CA Foreclosure Knowledge-base:

Loan Modification Companies in California

In California, many people wanting to keep their house hire a loan modification company.  A loan modification company in California will often promise to:
  1. Review your account and suggest a course of action.
  2. Use the correct documents and correct negotiating techniques based on their expertise in the law.
  3. Stop the foreclosure proceedings.
  4. Obtain faster and better results because loan modification companies are better at negotiating with lenders.
  5. Buy you more free time in the property.

Why Hiring a Loan Modification Company May Not Be in Your Interest

What they don’t tell you is that loan modification companies' success rate is very very low.  Based on their past performance, you will very likely lose your home and completely destroy your credit rating in the process.  You must avoid these problems with loan modification companies:
  • Loan modification companies in California are only able to get lender approval less than 10 percent of the time.
  • The lender’s loan modification offers often re-amortize the late fees and legal costs back into the loan and extend the loan term to 40 years or more.  Quite often, the borrower’s costs actually increase.
  • According to the Fitch Rating Agency (they rate the banks’ performance), it was estimated that 65 to 75 of homeowners (conservatively) would “re-default” on their loans within 12 months of receiving loan modification approval.
The truth is this:
  • In reviewing loan modification requests, lenders are making a financial decision, not a legal decision.  The legal stuff follows after the financial decision is made!
  • You cannot force a lender to approve a loan modification by hiring a loan modification company.
  • The lender has better companies than you.

What is a California Home Owner to Do?

Your lender is making a financial decision and if the numbers aren't there, the deal won't be either. A loan modification company may help you with the process of loan modification, but they may not be able to get  you a favorable deal. Find out why short sale might be a better option.