FREE Loan Modifications May Be
Hazardous To Your Mortgage
Last Update: 03/22/2009

TNLMA™ believes it is critical that distressed homeowners understand that a FREE loan modification is not always FREE. Listed below are important points to be aware of when working directly with your lender.

1. Loan modifications come in all shapes and sizes. Most of the news media, government agencies and non-profit organizations have little or no understanding of this. Many still believe a loan modification comes in one size fits all. Lenders are clearly aware of this perception and use it to their advantage when working directly with a borrower. Some Lenders use the term FREE to mask sub-par (higher interest and/or less principal reductions) loan modifications.

2. Lenders have a fiduciary and contractual obligation to protect their stockholders, not you. Your lender does not represent your interests, they represent their investors interests.

3. Given you are already contractually bound to your lender with your existing mortgage, working directly with you without you having professional representation is a clear conflict of interest.

4. Blanket wholesale loan modifications can put you, as a distressed home owner, in a worse situation by actually increasing your mortgage payment, or giving you a false sense of security with an initial lower payment, only to recast your mortgage a few months later with higher payments and now you are in a worse position, not being able to modify your loan for another 12 months.

5. Many lenders are seeking to mitigate their losses by getting borrowers to take a higher interest loan modification than what could have been structured with professional representation. In fact some Lenders have internal compensation structures that pay more to their representatives for keeping a loan modification's interest and remaining principal balance higher. There is nothing inherently wrong with this - their stockholders and investors expect this.

6. Many borrowers have no or very little understanding of exactly what the loan modification structure actually was they accepted, but are simply happy that it was FREE. In many cases this exuberance is shorted lived.

7. If a non-profit organization connects you to your lender, make sure that organization is also a fiduciary representing you. Many non-profit organizations may not understand that they may be walking you into the wolves' den.

8. If your Lender is offering a FREE loan modification, they will usually require your current financial scenario. In some cases whether the loan modification is FREE or not, borrowers can literally lose the opportunity because they were either unable to put together an a complete scenario; gave the their Lender an inaccurate scenario; or did not know how to legally maximize their scenario to take advantage of a Lender modification program.

9. Other things you can get for FREE, or can do directly without representation:

    a. You can represent yourself in a court of law

    b. You can technically perform surgery on yourself (in some cases)

    c. You can perform you own dental work

    d. You can buy your own home or secure a mortgage

    e. You can do your own plumbing

    * We recommend that you do not attempt to do any of these above.

Your home is the greatest investment you will most likely make. Make sure to consider all options when determining the best solution to assist you with any hardship you may be experiencing.