What will my rate be?

A better question might be “What will my end payment be after this loan modification?”  This still can’t be determined up front.  So the next best question would most likely be, “What is the goal of this loan modification process?”  I like this approach better.  The goal of the loan modification should be to put you in a better home affordability scenario than you are in currently.  This can be done by adjusting a few features like the:

• Loan Rate
• The Loan Payback Length (say stretching 30 years to 40 years)
• Fixing an adjustable rate
• Throwing any late payments to the back of the loan
• And even forgiving the loan balance - yes I said it, CUTTING the loan balance.

Since this is a complicated process and involves communication on several different level with both the lender and the investor who is actually the hidden owner of your Mortgage Note; any upfront guarantees are generally just fictitious when discussed early on in the process.  It’s unfortunate, but we need to step back and look at why these guarantees are popping up. Try to imagine having a doctors visit over the phone and after a brief conversation with the doctor, you ask the doctor if he / she will guarantee your recovery results.  Absurd, isn’t it. There’s no legitimate doctor worth working with that would offer that guarantee to you.  And more importantly, you should not be so gullible to ask for it - upfront.  But for some reasons we as consumer are always looking for guarantees.  It seems to me we do this for 2 reasons:

1) We as consumers don’t seem to work through referrals and therefore believe the advertisements that are everywhere you turn.

2) We also have been burnt before and want a way out if needed.

3) Many times the decisions, process and outcome are just to complicated and beyond our training, since we are not specialized in the field we are seeking help in ... and we just want a bottom line.

All of the above points are why I believe we jump towards our safety mechanism in asking for a “guarantee”. 

My suggestion – proceed with your Loan Modification they way you would proceed with a doctor when you found out you might have cancer:

1. You share your situation with trusted friends;
2. Seeks their advice on contacting a reputable professional (doctor, in this case) they have had previous successful experiences with;
3. Then you contact that doctor and go in for a visit for an initial consultation;
4. At that time a doctor should do the necessary evaluation;
5. And then plot out a course of action.

We as consumer need to do the same thing when it comes to asking for guarantees from service providers.  Trust me, your financial picture would be far stronger if you were working with your trusted adviser - and not independent of them.

What will my fees be?

This is a good question to ask after your do your hopefully free initial consultation. After your financial adviser as had a chance to review your situation. They will be in a better position to guide you into a certain direction to achieve your end goal and the appropriate cost for that path.  Therefore the fee they quote you should be guaranteed as they are the professional and need to present you with an accurate estimate.  At the end of the loan modification transaction a true professional will honor their initial quote.

This article has been provided by Raj and Ravi.  Raj and Ravi are experts in the lending industry.  They each have at 16+ years experience in the mortgage industry and real estate investing. In addition to consulting their clients in the real estate and lending industry, Raj and Ravi are featured financial columnist for MoneySolution.com .

Click here for a Free Mortgage Analysis from Raj and Ravi.

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