May 19, 2010 in Mortgages

Tips for getting a mortgage loan modification

Getting a mortgage loan modification might seem like a quest only a mythic hero could achieve. After all, the ranks of those who’ve lost homes in foreclosure dwarf the number of homeowners who’ve received mortgage help.

Meet Lisa Langlois, mythic hero.

Langlois, a single mom, actress and homeowner in Santa Monica, Calif., suffered “a series of unfortunate events that all happened clustered together.”

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First, she was served with divorce papers. Then she was loaded with medical bills, despite having two health insurance policies, after an SUV struck her son.

Caught in a financial undertow, she turned for help to the nonprofit Los Angeles Neighborhood Housing Services. The organization eventually helped get her home loan modified.

The seemingly mysterious nature of who qualifies for a loan modification is legendary among housing counselors. But these experts say there are ways homeowners can better their chances.

Following are housing counselors’ tips for getting a mortgage loan modification:

  • Be persistent. Homeowners naturally feel frustrated when they’re asked to resubmit documents. But those who realize they are “at the beck and call” of the servicer and “can hang in there long enough” may be rewarded, says Richard Call, grants administrator for the housing program at Apprisen.

On the other side of the table, representatives of loan servicers also offer tips for homeowners seeking a modification. They include:

Success story

Langlois’ story is proof that diligence and determination can pay off in the form of mortgage help.

Initially, she called Countrywide Loans and later Bank of America to apply for a loan modification. She also approached local attorneys, who wanted a $4,000 retainer — money she might have borrowed had the attorneys not quit the business when California enacted a law that banned advance fees on their loan modification services.

“It wasn’t that I didn’t know how to prepare a profit-and-loss statement,” Langlois says. “It was that the lawyers knew how to finesse the application. That was valid to me because I thought that in dealing with a bank, they are the sharks and I am the tuna, and I didn’t want to get eaten.”

After a year without relief, she finally found help through Los Angeles Neighborhood Housing Services. Within days, she submitted a complete package and received a loan modification. The new loan is 10 years interest-only with an option to pay principal and a first-year interest rate of 3.5 percent. That’s a savings of $800 per month — and an end to negative amortization.

“I’d love to say they looked at my potential and wanted to help me,” she says. “But they don’t tell you why they say yes.”