What Is a Loan Modification?

This is where we renegotiate our client's existing contract with the lender. A loan modification is effective when the initial teaser rate has expired, and the new interest rate explodes to ten percent or more. The lender may be willing to extend the teaser rate for a few more years, keeping our client in the home while the lender collects a monthly payment. Smart lenders see this arrangement as better than collecting nothing from a vacant house.

Who Will Handle My Loan Modification?

Our loan modification team consists of attorneys and loss mitigation consultants. While a loan modification can be accomplished without counsel from an attorney, borrowers should keep in mind that the loan they now have was done without an attorney looking out for them. A loan modification can be considered a "new" loan, because there will be a new contract signed. This new contract will have new terms, and new payments. These new terms and new payments should be completely understood by the borrower. Our team will fully and accurately explain the new loan terms and payments.

Do I Really Need an Attorney?

There are many people advertising loan modifications services on the Internet and through other media outlets. While some of these people may be well-meaning and competent, troubled borrowers need to keep in mind that there is a virtual "army" of out-of-work loan officers, brokers, escrow officers, and underwriters out there looking to make money. Many of these mortgage professionals are the same ones who sold the toxic loans that now need modification. Extreme caution should be exercised when hiring someone to get you out of a bad loan. To avoid falling victim to a predatory lender twice, we suggest hiring an attorney, whether our firm or another.

What Kind of New Terms Can I Expect?

The first thing we tell our clients is that they need to be realistic. If someone owes $700,000 and can only afford a payment of $1,000 per month, and that payment must include taxes and insurance, we set that person straight. That person can not afford their house. What is realistic is to expect fixed payments for anywhere from five to thirty years at an interest rate of between six and seven percent. These are realistic numbers for the borrower and the lender.

Do Lenders Reduce Balances?

Many people think that the lenders should write off loan balances as part of a loan modification, and while we agree, the lenders are just not agreeing to such modifications at this time. There's a lot of red tape in the process that prevents lenders from reducing balances, even though such an arrangement would be logical. That said, we believe we will see principle reductions becoming quite common as we go into 2009 and the meltdown continues.

Will Fransen & Molinaro Guarantee Results?

No. While that may not be the answer you expected, please understand that there is no way to guarantee a loan modification, short sale, deed-in-lieu of foreclosure, or any other desired result. Any lawyer, firm or organization that does make such a guarantee should be heavily scrutinized, if not doubted.

The only guarantee we make is that we do our best to provide the services you hired us to perform. We understand the value, both economic and emotional, of your home. We truly want to help people keep their homes, stay in their neighborhood, and raise their families as they had planned.