Is it worth $4,000 to save your home? That number is considered generally to be at the top end of the range of the cost of an attorney driven loan modification. Successful loan modifications can not only keep families in their homes, they can cover the cost of a modification many times over. Still, there are those in the media, government, and elsewhere who would say that $4,000 is too much to pay and that homeowners should go it alone. What is left out of that equation are two issues, the first being the failure rate of homeowner driven modifications. An article written March 24th, 2009 by Bloomberg reporter Jody Shenn quoted Sean Dobson, chief executive officer of Amherst Securities Group, LP, an Austin, Texas firm that focuses on home debt. He said, “Most modifications are a sham done in the servicers’ self-interest, and they do nothing to benefit the homeowner…”Later in the same article he says, “Fifty-eight percent of modifications made during 2008’s first quarter ended up back in default, according to the U.S. Treasury’s Office of the Comptroller of the Currency.”

The second risk is that, even if successful, an ill-prepared homeowner is not going to get near the deal that an experienced attorney would. On March 9th 2009 LA Times reporter Michael Hiltzek wrote, “Modifying a delinquent or defaulting home loan is a labor-intensive process, not easily handled by a workout officer with, say, 800 files on his or her desk.  Moreover, banks panicky about their dwindling capital are reluctant to book losses until they have to.  So the banks refuse to talk to distressed borrowers until their loans are already months in arrears; even then, assuming contact is made, the banks are so desperate to minimize their declared losses that the terms they offer borrowers often aren’t generous enough to save the loan.”

A recent Fox News “Investigative Report” stated that in December 2008, Compton, California residents got to square off face to face with their lenders at a conference covering troubled mortgages. The report trumpeted that, by the end of the day, 1,600 loan modifications had been completed. It is unclear whether the people in attendance knew in advance that they were going to a “loan modification fair” but what is clear is that these quickie loan mod’s were done with no representation for the homeowners as they squared off against negotiators for the various lenders. If “Most modifications are a sham done in the servicers’ self-interest…”, the future does not bode well for those homeowners in Compton.

The bottom here is that a homeowner is probably going to get one shot at getting his or her loan modified. That same homeowner might have a passing knowledge of the generalities of his mortgage contract. He will definitely be considered an amateur as he steps in to negotiate one of the larger, if not the largest, contracts of his life. Why would anyone fly solo under those types of conditions? Is it worth the all the risks to “save” $4,000? 

So let’s ask the question again, “Is it worth $4,000 to save your home?” The “no-brainer” answer is an obvious “Yes” to saving a family’s home. Let’s now look at the money spent as an investment instead of a cost. Going that way, the return on that $4,000 might be the best investment that family will ever make, at least in terms of percentage returns. Here’s an example of how much a successful attorney driven loan modification can save a family.  Feldman Law Center recently completed a loan modification where the borrowers were paying an interest rate of 10% with monthly payments of $3,150. The loan was then modified to an interest rate of 5% with a term of 5 years. With a monthly savings of $1,302 the homeowners’ total savings over the five year term will be $74,620 net of all expenses. The final number works out to be about 17 times the $4,000 investment. If you were an investor would you put up $4,000 to earn $74,620? Looking at it in those terms, who wouldn’t?

Visit us at http://www.feldmanlawcenter.com or call 800-588-0425